procedure redundancy

unreasonable refusal of alternatives to redundancy

Source: Creative Commons

In January 2012 I reported the decision of the Employment Appeal Tribunal in the case of Readman v Devon PCT concerning whether or not it was reasonable for a specific employee to reject alternatives to redundancy which would have been accepted by a reasonable employee. The EAT decided that Mrs Readman was entitled to reject the offers, thereby overturning the decision of the Employment Tribunal. I pointed out at the time that when, according to the EAT, the Tribunal got its analysis fundamentally wrong, it demonstrated just how hard it is for employers to get things right when trying to apply fair procedures

That observation has been well and truly reinforced by the decision of the Court of Appeal – Devon Primary Care Trust v Readman. The Court considered two issues – whether an Employment Tribunal had been wrong to decide that a nurse had lost the right to a redundancy payment by unreasonably refusing an offer of suitable alternative employment, and how that question should be addressed. After 30-odd years mainly spent working in the community the employee was working as a modern matron. On facing redundancy, she was offered three options – two jobs at a lower grade (which were not suitable) and a job at the same grade, but working in a small hospital.

Although it had correctly looked at the question from the employee’s subjective point of view, the Tribunal had got it wrong, by failing to consider all the relevant facts properly including the employee’s preference for working in the community rather than a hospital, and the possibility that the reason for refusal was because she wanted to emigrate to Canada.

However, the Employment Appeal Tribunal had also got it wrong. Their answer had been to say that the employee’s decision was “within the range of reasonable responses” available to her, and had concluded that she was entitled to keep the redundancy payment. The Court of Appeal criticised the adoption of the “range of reasonable responses” test in this new context, and also found that it was not one of those cases where the outcome was so obvious that an appeal tribunal could make a decision based on the facts already found. Reluctantly the Court decided that the correct course was to remit the case to the tribunal to consider the core factual issues and decide whether the refusal of the job offer had been reasonable, from the perspective of the employee.

As summarised by Lord Jutice Pill:

A central issue was whether in all the circumstances the respondent’s refusal to work in this hospital setting was reasonable or unreasonable. I am not able to find the Tribunal’s decision was “plainly and unarguably wrong”, or that the contrary result is “plain and obvious” as the EAT found. The judgment by a fact finding Tribunal that on the evidence the respondent acted reasonably in refusing the offer would not inevitably be in the respondent’s favour. My conclusion does not depend only on this further point, but I add that the EAT’s reliance on paragraph 36 of its second decision on the reasonable responses test was, in my judgment, misplaced. I do not find it helpful to import into a section 141 analysis the reasonable test used in unfair dismissal cases (Iceland Frozen Foods v Jones [1983] ICR 17, per Brown Wilkinson J at page 24G to 25B). I do not find it helpful to apply that test in a section 141 context.

In unfair dismissal cases the Tribunal has to make a judgment on the evidence as to whether a decision to dismiss fell within the reasonable band of responses which a reasonable employer might have adopted. That is different from the test under section 141, which, as stated in Cox, involves a judgment as to whether an employee has unreasonably refused an offer, “Looking at it from her point of view on the basis of the facts as they appeared or ought reasonably have appeared to her at the time the decision had to be made.” A specific judgment needs to be made, not a judgment on whether the decision fell within a reasonable band of responses which a reasonable employee might have made.

In unfair dismissal cases, the danger was perceived that Employment Tribunal members would put themselves in the position of the employer and make their decision on the basis of what they would have done in the circumstances. It has been made clear that their task is instead to decide whether dismissal by the employer was within the range of reasonable responses in the circumstances. The task under section 141(2)(b) is that stated in Cox, whether this particular employee in this particular situation acted reasonably in refusing the offer of employment. Cox is a clear test, and has been applied by Tribunals for 30 years. The Tribunal correctly stated it in this case. There is no justification in my judgment for complicating and distorting that test by importing into it the reasonable responses test applied to employers in unfair dismissal cases. That test was introduced by the EAT in its review decision in this case. It was absent from its first decision. The EAT appears to have taken the view that it gave a broader scope to the power to replace the Tribunal’s conclusion with the EAT’s own conclusion. That was not, in my view, permissible. Nor should Employment Tribunals depart from the Cox test. It may be that reliance on the wrong test has led the EAT to a conclusion at paragraphs 36 and 37 of the review decision which, in my view, was not justified.

Therefore, not for the first time in cases of this nature, the parties are back to square one. The Court of Appeal decision will have to be followed but surely then it is just a matter of time before, whether in this case or another, the issue will be come the subject of further appeals.

Martin Malone

By Martin Malone

I'm a solicitor and the chief operating officer at Canter Levin & Berg. I was formerly head of the employment department.
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