Nicholls v Rockwell Automation Ltd

In a redundancy dismissal, the tribunal must apply the broad evaluative test in section 98(4) of the Employment Rights Act 1996. It must assess the employer’s reasoning and the reasonableness of its decision. It must not substitute its own view of an employee’s capabilities or re-mark individual selection criteria.

Where the employer has adopted a fair selection system and applied it without overt unfairness, a detailed critique of a small number of scores is generally impermissible. Criteria need not be objectively verifiable in the sense of being independent of managerial judgment. A Polkey reduction requires an evidential foundation, but may properly involve estimation.

The claimant, a field service engineer, was selected for redundancy after receiving the lowest score in a selection exercise. The Employment Tribunal found that redundancy was the genuine reason for dismissal, that the procedure was fair, and that there was no improper motivation connected with his part-time working. It nevertheless held the dismissal unfair because scores for flexibility, administration and product skills did not accurately reflect his capabilities. It proposed a one-third Polkey reduction.

The employer appealed against the unfair-dismissal finding. Both parties appealed the proposed Polkey reduction. The central issue was whether the Tribunal had impermissibly substituted its assessment of individual redundancy scores for that of the employer.

1. Appeal allowed. The Employment Tribunal erred in law in finding the dismissal unfair. A finding was substituted that the redundancy dismissal was fair.

2. Under section 98(4) of the Employment Rights Act 1996, the Tribunal had to make a broad assessment of the employer’s reasonableness. Its task was to identify the employer’s reasons for dismissal and assess whether those reasons were reasonable. It was not to investigate the underlying facts and reach its own assessment of the employee’s capability.

3. The Tribunal could examine elements of scoring while determining the claimant’s allegation of improper motivation. Once it rejected that allegation, however, it had to stand back and assess the selection process broadly. In the absence of overt unfairness in a fair selection system, [1995] IRLR 437 precluded an over-minute critique of individual marks.

4. The Tribunal instead focused on a small group of scores and concluded that they were lower than they should have been. It made no findings as to the managers’ reasons for those scores before rejecting them. It thereby substituted its own view for that of the employer, including on product skills.

5. Selection criteria need not be independently verifiable by objective material. Criteria involving managerial judgment may still be assessed fairly and dispassionately. The Tribunal had found a genuine redundancy, a fair procedure, no improper motivation, and implicitly reasonable criteria. On those findings the dismissal was plainly fair.

6. The appeals concerning the Polkey finding were dismissed, although they were academic after the substituted finding. A Polkey reduction requires an evidential basis but necessarily entails estimation. The Tribunal had sufficient material and had acted fairly in relying on evidence elicited during the hearing.

• Employment Appeal Tribunal: Allowed the employer’s appeal and substituted a finding that the dismissal was fair. It dismissed both appeals concerning the proposed Polkey reduction.
• Employment Tribunal, Birmingham: By a judgment dated 16 June 2011, found the claimant unfairly dismissed and indicated a one-third Polkey reduction in compensation.