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Redundancies, Re-organisations and New Roles – The case of Mr L Morgan v The Welsh Rugby Union [2010] UKEAT/0314/10/LA

Background

The case of Mr L Morgan v The Welsh Rugby Union [2010] UKEAT/0314/10/LA is the latest case dealing with the law where redundancies arise due to a re-organisation and there are new, different roles to be filled.

In Morgan the Claimant, a National Elite Coach Development Manager was involved in a re-organisation in early 2008.  Mr Morgan’s post, together with a post held by one of Mr Morgan’s colleagues, Mr Schropfer were to disappear and the single post of National Coach Development was created.  There were three applicants for the post which included Mr Morgan and Mr Schropfer.  The Respondent considered that both Mr Morgan and Mr Schropfer were capable candidates but chose to appoint Mr Schropfer. Mr Morgan’s complaints in respect of the selection process included that the Respondent failed to compare the relative skills of Mr Morgan and Mr Schropfer, that the Respondent ignored its own job descriptions and person specification for the role, that the panel interviewing the candidates lacked a coaching expert, that Mr Schropfer was allowed more time than Mr Morgan to give a presentation which formed part of the interview process and that the Respondent failed to use the marking criteria laid down for the interview.

The Employment Tribunal, in a majority decision, had dismissed Mr Morgan’s claim and held that the interview process for the new role was sufficiently objective to avoid the possibility that the decision might be seen as capricious or arising out of favouritism to Mr Schropfer.  The Employment Tribunal found that the selection process including the interview met at least some criteria of fairness so as to render the process fair and reasonable.

The EAT upheld the Employment Tribunal’s finding of unfair dismissal despite agreeing with the Employment Tribunal that it would have been better if the interviewing panel had followed the intended process more strictly.  The EAT held that Respondent was not bound to adhere to the job descriptions slavishly or precisely.

Relevant Case Law

Guidelines to assist in determining whether dismissal for redundancy is fair were set out in the case of Williams –v- Compair Maxam Ltd [1982] IRLR 81.  As will be noted this was a case which involved collective redundancies where there was a Trade Union recognised by the employer.  In Williams the Employment Appeal Tribunal set out five guidelines:

  1. The employer will seek to give as much warning as possible of impending redundancies so as to enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider possible alternative solutions and, if necessary, find alternative employment in the undertaking or elsewhere;
  2. The employer will consult the union as to the best means by which the desired management result can be achieved fairly and with as little hardship to the employees as possible.  In particular, the employer will seek to agree with the union the criteria to be applied in selecting the employees to be made redundant.  When a selection has been made, the employer will consider with the union whether the selection has been made in accordance with those criteria;
  3. Whether or not an agreement as to the criteria to be adopted has been agreed with the union, the employer will seek to establish criteria for selection which so far as possible do not depend solely upon the opinion of the person making the selection but can be objectively checked against such things as attendance record, efficiency at the job, experience, or length of service;
  4. The employer will seek to ensure that the selection is made fairly in accordance with these criteria and will consider the representations the union may make as to such selection;
  5. The employer will seek to see whether instead of dismissing an employee he could offer him alternative employment.

The case of Darlington Memorial Hospital NHS Trust –v- Edwards & Vincent [1995] UKEAT 678/95 made it clear that where there were new posts with different job descriptions, an employer was not under a duty to carry out an exercise in the same manner as when deciding who to select for redundancy.  In Darlington, the EAT pondered whether in selecting candidates for new posts there could be said to be a “duty of care” owed by the employer to the employee applicants.  The EAT stated, “It may be, we are not going to decide this, that the duty goes beyond faith, and it may be said that there is some sort of duty of care, but there it is, it is something which the employer has said he will do and he must do it. He must consider the applicants”.

Another important pre-cursor to the case of Morgan is the case of Ralph Martindale & Co Ltd v Harris [2008] UKEAT/166/07.  In Ralph Martindale a layer of management had been removed and a new position of Director and General Manager had been introduced for which the Claimant applied.  The EAT upheld the Employment Tribunal’s original decision that the Claimant’s dismissal had been unfair on the grounds of the subjective criteria used.  The EAT, at paragraph 11, endorsed the Employment Tribunal’s reasoning that “current industrial practice would indicate that the method of selecting which employee will get the new role would involve a reasonable employer in operating a system which was objective and avoided the possibility of a decision which might be seen as capricious or arising out of favouritism for one candidate over another on personal grounds”.

A closer look at Morgan

In Morgan, the EAT, as in previous cases, drew a distinction between those cases were employees from a pool were to be made redundant and were being selected to retain their positions and where an employer had to appoint individuals to new roles after a re-organisation, where the employer’s decision would be forward-looking.  The EAT stated that, where in the former case the Williams type selection would involve consultation and meetings, in the latter case, appointments to a new role were likely to involve something much more like an interview process.

The EAT held, at paragraph 35, that Ralph Martindale should not be treated as laying down any principle of law which a subsequent Employment Tribunal is bound to follow, except that the Employment Tribunal must apply the normal test for unfair dismissal under Section 98(4) of the Employment Rights Act 1996.  The EAT drew a distinction between Ralph Martindale and the facts of Morgan.  The EAT stated that it was not surprising that the Employment Tribunal was critical of the processes and found the dismissal unfair under Section 98(4) in Ralph Martindale given there was no job description of any kind and the interview had no influence on the outcome of the decision making.

At paragraph 36 of Morgan the EAT gave guidance on the relevance of both objective and subjective criteria in the interview process:

To our mind a Tribunal considering this question must apply section 98(4) of the 1996 Act. No further proposition of law is required. A Tribunal is entitled to consider, as part of its deliberations, how far an interview process was objective; but it should keep carefully in mind that an employer’s assessment of which candidate will best perform in a new role is likely to involve a substantial element of judgment. A Tribunal is entitled to take into account how far the employer established and followed through procedures when making an appointment, and whether they were fair. A Tribunal is entitled, and no doubt will, consider as part of its deliberations whether an appointment was made capriciously, or out of favouritism or on personal grounds. If it concludes that an appointment was made in that way, it is entitled to reflect that conclusion in its finding under section 98(4).

Conclusion

It was once felt that further development to the concept of the duty of care suggested in Darlington could mean that Employment Tribunals would deal with selection for new roles in a similar manner as cases for normal redundancy.   The editors of Harvey on Industrial Relations and Employment asked, “what exactly is this duty of care; if developed further would it end up looking not a million miles away from the ordinary redundancy selection rules?”.[1] Morgan eschews any concept of the duty of care and indeed any analysis outside of the four corners of the statutory test for fairness under Section 98(4).

Morgan does not assist by laying down any guidance as to the extent the interview process for new roles should be objective.  Unfortunately we are left with a great deal of uncertainty in this area.  Whereas in Ralph Martindale the EAT indicated that an employer should operate a selection system that was “objective” and avoided capriciousness or favouritism, Morgan tells us that an Employment Tribunal in assessing the process, “is entitled to consider” how far an interview process was objective but that it should keep carefully in mind that an employer’s assessment of candidates is likely to involve “a substantial element of judgment”.

There now can be no doubt following Morgan that redundancies involving selection for new roles places a less onerous test on the employer than the guidelines formulated in Williams and those normally applied in redundancy cases.

However, caution is still advised to employers, even if they are sure that they are dealing with redundancies where new roles have been proposed.  When making new appointments following a redundancy exercise, employers should take care to ensure that fair procedures are followed, that appointments are as far as possible based on carefully decided objective criteria and that safeguards are in place to ensure appointments cannot be made on account of favouritism or on personal grounds.


[1] Harvey on Industrial Relations and Employment, Section D1, Paragraph 1725.

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