Roberts v. Acumed Ltd

A dismissal to impose new employment terms may be for some other substantial reason under section 98(1)(b) of the Employment Rights Act 1996 where the employer has a sound business reason. The employer need not show that the change is essential or that the business’s survival is at stake. The assessment of the business reason is distinct from the later question of overall fairness under section 98(4).

Under regulation 4(1)(a) of the now-repealed Employment Act 2002 (Dispute Resolution) Regulations 2004, “description” or “category” is determined by job function and title, not by individual remuneration arrangements. The exemption does not apply where only one employee is in the relevant category. Steps 1 and 2 of the statutory dismissal procedure had to occur before notice of dismissal was served.

The Claimant was an Area Sales Manager whose commission was calculated by reference to total sales, unlike the other four Area Sales Managers, whose commission depended on sales growth. Following unsuccessful negotiations about changing his remuneration, the Respondent gave notice terminating his contract and offered re-engagement on new terms.

An Employment Tribunal held that the dismissal was for some other substantial reason and was fair. It also held that the statutory dismissal procedure did not apply because the Claimant was the only employee in his remuneration category. The appeal concerned the proper approach to section 98(1)(b), the fairness finding, the regulation 4(1)(a) exemption, and whether the statutory procedure had been complied with.

1. Some other substantial reason. The Employment Tribunal did not err in finding that the proposed alteration of the Claimant’s remuneration was supported by a sound business reason and therefore satisfied section 98(1)(b) of the Employment Rights Act 1996. The employer was not required to prove that the reorganisation was essential or that the business was threatened with survival. The threshold is directed against trivial or unworthy reasons. Once a reason could justify dismissal on its face, the inquiry proceeded to fairness under section 98(4).
2. The business justification and the disadvantages to the employee were not to be conflated. The balancing exercise belonged to the assessment of fairness, not to the threshold question whether a substantial reason existed. The Employment Tribunal’s conclusion that the dismissal was fair was supported by the evidence and was not perverse. The Respondent had considered the Claimant’s position, negotiated over a prolonged period, and sought to align remuneration across the Area Sales Managers.
3. Regulation 4(1)(a). The Employment Tribunal erred in treating the Claimant as belonging to a separate category because his commission structure differed. Employees may remain within the same description or category despite different remuneration, pay scales or remuneration components. The relevant description or category was determined by job function and title. The Claimant was one of five Area Sales Managers, and the other four were not dismissed. The exemption therefore did not apply. It also did not apply where there was only one employee in the relevant category or description.
4. Statutory dismissal procedure. The interpretation provisions in the Regulations applied to the Employment Act 2002, under which the Regulations were made. “Action” therefore included any act or omission. Steps 1 and 2 had to occur before the employer served notice of dismissal. Serving notice moved the employer beyond contemplation and constituted action leading to dismissal. Step 3 could occur after dismissal had taken effect, but the appeal meeting had to be a genuine appeal against the dismissal.
5. The emails and meetings relied upon by the Respondent did not satisfy Steps 1, 2 or 3. They occurred after notice had been served, did not state the grounds for dismissal or provide a proper opportunity to answer them, and concerned alternative remuneration arrangements rather than an appeal against termination. The dismissal was consequently automatically unfair under section 98A. The Employment Tribunal’s finding was set aside, a finding of unfair dismissal was substituted, and the case was remitted to the same Tribunal, if practicable, to determine remedy.

• Employment Appeal Tribunal: allowed the appeal on the statutory dismissal procedure issue, set aside the finding that the dismissal was fair, substituted a finding of unfair dismissal, and remitted the case to the Employment Tribunal for determination of remedy.
• Employment Tribunal: held that the dismissal was for some other substantial reason and was fair, and that the statutory dismissal procedure did not apply under regulation 4(1)(a) of the Employment Act 2002 (Dispute Resolution) Regulations 2004.