Mitchells Of Lancaster (Brewers) Ltd v Tattersall

In a redundancy selection exercise among senior managers, criteria requiring commercial judgment are not unfair merely because they are subjective, unscored, or based on directors’ views. Such criteria may be assessed objectively and dispassionately without becoming a box-ticking exercise.

However, where the employer identifies a pool of employees, it must conduct a genuine and fair selection process within that pool. It is unfair to select one individual immediately and then fail to give real consideration to whether another pooled employee should instead be selected. A Polkey reduction must reflect the likelihood of dismissal under a fair process and may require reconsideration where the tribunal has wrongly rejected the employer’s selection criteria.

The respondent brewer dismissed its property manager for redundancy after its trading position and cash flow deteriorated. The Employment Tribunal held that redundancy was the reason for dismissal and that the proper selection pool comprised the five members of the senior management team. It found the dismissal unfair because the criteria were subjective, the selection process was inadequate, and the appeal officer was unsuitable. It reduced compensation by 20% under Polkey.

The employer appealed the findings on pool, criteria, process and appeal, and challenged the deduction. The central issues were whether the redundancy dismissal was fair and whether the compensatory reduction properly reflected the prospect of dismissal after a fair procedure.

1. Appeal allowed in part. The Employment Tribunal’s conclusion that the claimant had been unfairly dismissed was upheld, but its 20% Polkey reduction was set aside for reconsideration on remission.

2. The Tribunal was entitled to find that the redundancy pool consisted of all five senior management team members. That finding was supported by the board minutes and the managing director’s evidence. In the absence of the witness evidence before the Tribunal, there was no proper basis for disturbing that factual finding.

3. The Tribunal erred in treating the employer’s selection criteria as unacceptable. In a small company in serious financial difficulty, it was legitimate to assess which senior management role could be removed with the least detriment to the business. Criteria involving managerial judgment do not become invalid because they are subjective, not readily scored, or based on directors’ views. They may still be assessed objectively and dispassionately.

4. Nevertheless, the dismissal was unfair. Once the pool of five had been identified, the employer selected the claimant immediately and did not genuinely consider whether another senior manager should be selected. The subsequent activity concerned persuading the claimant to accept another role or leave. He had no real opportunity to contend that another pooled employee should be selected. The Tribunal was entitled to regard that process as unfair.

5. The Tribunal’s criticism of the internal appeal process could not stand. There was no objection to the appeal officer, no reason to doubt that she conducted a fair hearing, and the matters relied upon did not justify the conclusion that her appointment was outside the range of reasonable responses.

6. The 20% reduction rested on the erroneous conclusion that the selection criteria were unacceptable. On the facts found, those criteria indicated a significantly greater prospect that the claimant would have been selected in a fair process. The amount of the increased reduction was remitted to the same Tribunal, together with remedies, without further evidence.

• Employment Appeal Tribunal: Allowed the employer’s appeal only as to the adequacy of the Polkey reduction and remitted that issue.
• Manchester Employment Tribunal: By decision of 12 September 2011, case number 2400441/11, held that the claimant had been unfairly dismissed and directed a remedies hearing.