Capita Hartshead Ltd v Byard

In a redundancy dismissal, the employer has primary responsibility for defining the selection pool, but the Employment Tribunal may scrutinise that decision under section 98(4) of the Employment Rights Act 1996.

The relevant question is whether the dismissal fell within the range of reasonable responses. There are no rigid rules governing the composition of the pool. Even where the employer has genuinely considered the issue, the pool remains open to challenge if the reasoning is flawed. A pool of one is not automatically unfair. The tribunal may uphold a challenge where employees perform similar work, the selected employee’s performance is not criticised, and the employer’s asserted risk from including others is slight.

An Employment Tribunal upheld, by a majority, Ms Byard’s complaint of unfair dismissal. It accepted that redundancy was the reason for dismissal but found that Capita Hartshead had unfairly placed her in a selection pool of one, although other actuaries performed similar work. The Tribunal also found insufficient evidence that a wider pool would have been useless or that dismissal would almost certainly have followed.

Capita appealed, arguing that the pool was primarily a matter for the employer and that the Tribunal had substituted its own view for that of a reasonable employer. The central issue was the extent to which an Employment Tribunal may scrutinise an employer’s choice of redundancy selection pool.

1. Appeal dismissed. The Employment Tribunal had correctly applied section 98(4) of the Employment Rights Act 1996.
2. The statutory question was whether, having regard to the circumstances, the employer acted reasonably in treating redundancy as a sufficient reason for dismissal. The reasonable-response test applied both to the selection of the pool and to the selection of the employee from that pool.
3. The employer had primary responsibility for defining the pool. The observation in Taymech v Ryan [1994] EAT/663/94 that the matter was primarily for the employer applied where the employer had genuinely applied its mind to the problem. It made challenge difficult, but not impossible.
4. The Tribunal was entitled, and in practice obliged, to scrutinise the employer’s reasoning. It was not bound by rigid rules concerning which employees should be included. The issue remained one for determination under the statutory standard, with factual findings generally receiving substantial appellate respect.
5. The Tribunal had found that the other actuaries performed similar work, that Ms Byard’s performance was praised, and that the risk of losing clients if Scheme Actuary appointments were changed was slight. Those findings had an evidential basis. The Tribunal was entitled to conclude that the employer’s reasoning was flawed and that the pool should not have been limited to one.
6. The Tribunal’s further observation that a pool of one reduced the value of consultation was only an additional reason. The dismissal was unfair on the principal reasoning even if that additional observation were erroneous. The Tribunal had not held that a pool of one was automatically unfair.
7. The challenge based on perversity failed. The decision fell well within the range of conclusions open to the Tribunal and did not approach the overwhelming case required by Yeboah v Crofton [2002] IRLR 634.

• Employment Appeal Tribunal: dismissed Capita Hartshead Ltd’s appeal from the Employment Tribunal’s majority finding that Ms Byard had been unfairly dismissed.
• Employment Tribunal: found redundancy to be the reason for dismissal but held that the selection pool of one was unfair and awarded compensation, reduced to reflect the chance that dismissal would otherwise have occurred.