Arnold Clark Automobiles Ltd v Mak

For a dismissal to be by reason of redundancy, the tribunal must apply the statutory question: whether it was wholly or mainly attributable to a cessation or diminution in the employer’s requirements for employees to do work of the relevant kind. A separate inquiry into the "operative reason" introduces an impermissible gloss.

Once redundancy is established as the reason for dismissal, fairness must be determined under section 98(4) of the Employment Rights Act 1996. The tribunal must give clear reasons for that assessment. If it finds unfairness, it must also consider whether compensation should be reduced to reflect the chance that dismissal would have occurred even with a fair procedure.

The claimant, a Training Specialist, was dismissed after the employer decided to stop developing contact centres. The Employment Tribunal held that there was a redundancy situation and that a pool of one was appropriate, but found the dismissal unfair. It concluded that the redundancy situation was not the operative reason for dismissal and criticised the employer’s efforts to identify suitable alternative employment.

The employer appealed. It contended that the Tribunal had applied the wrong test for redundancy, had not conducted the statutory fairness assessment, and had failed to consider a possible compensatory reduction under Polkey. The central issue was whether the Tribunal had correctly applied the statutory redundancy and unfair-dismissal provisions.

1. Appeal allowed. The Employment Tribunal applied the wrong legal test when it asked whether redundancy was the "operative reason" for dismissal. The governing question was whether the dismissal was wholly or mainly attributable to a cessation or diminution in the employer’s requirements for employees to perform work of the kind undertaken by the claimant.

2. On the facts already found, the claimant was dismissed by reason of redundancy. She had been dismissed, and the employer’s requirements for employees to carry out her work had ceased or diminished when further development of contact centres stopped. In the absence of a separate reason, the dismissal was wholly or mainly attributable to that redundancy situation.

3. The Tribunal had not clearly applied section 98(4) of the Employment Rights Act 1996. Its criticisms of the employer’s investigation of alternative employment might be relevant to fairness, but its Reasons did not show a statutory assessment of whether the employer had acted reasonably in treating redundancy as a sufficient reason for dismissal.

4. The Tribunal also gave no indication that it had considered the Polkey question. If it finds the dismissal unfair, it must assess, on the facts already found and with appropriate speculation, the percentage chance that dismissal would have occurred even if a fair procedure had been followed.

5. The matter was remitted to the same Employment Tribunal. There was to be no further fact-finding or retrial. It was directed to determine fairness under section 98(4) and, only if it finds unfairness, any Polkey reduction.

• Employment Appeal Tribunal: Allowed the employer’s appeal and remitted the case to the same Employment Tribunal for determination under section 98(4) of the Employment Rights Act 1996 and, if necessary, Polkey.
• Employment Tribunal, Glasgow: Held the claimant unfairly dismissed and awarded £948. The decision and Reasons were sent to the parties on 13 September 2013.