Appeal No. UKEAT/0635/11/JOJ

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

		At the Tribunal
		On 17 May 2012

Before
THE HONOURABLE MR JUSTICE SUPPERSTONE
MRS R CHAPMAN
MR D NORMAN

CUMBRIA PARTNERSHIP NHS FOUNDATION TRUST	APPELLANT

MR N STEEL	RESPONDENT

Transcript of Proceedings

JUDGMENT

AMENDED

	APPEARANCES

For the Appellant	MR ANDREW WEBSTER
(of Counsel)
Instructed by:
Messrs Ward Hadaway Solicitors
Sandgate House
102 Quayside
Newcastle‑upon‑Tyne
NE1 3DX	
For the Respondent	MR MICHAEL FORD
(of Counsel)
Instructed by:
UNISON
130 Euston Road
London
NW1 2AY	

SUMMARY
UNFAIR DISMISSAL
Employment Rights Act 1996, section 98(4) 
Fairness of dismissal 

Before the Employment Tribunal it was agreed that the Claimant was dismissed for the potentially fair reason of redundancy.  It was disputed that the test of fairness was satisfied.  The Claimant alleged that he was the highest scoring applicant for a new post, which he wished to accept and to which he should have been appointed.  ET found he had been unfairly dismissed.  Appeal by Employer failed.  In the light of the terms of the employer’s policy and past practice, ET was entitled on the evidence to conclude that the imposition of a competency bar in the context of a slotting-in process was outside the band of reasonable responses.  

THE HONOURABLE MR JUSTICE SUPPERSTONE
Introduction
1.	This is an appeal against a decision of an Employment Tribunal sitting at Carlisle sent to the parties on 1 September 2011 that the Claimant was unfairly dismissed by the Respondent.  Before the Tribunal it was agreed that the Claimant was dismissed for the potentially fair reason of redundancy.  It was disputed that the test of fairness under section 98(4) of the Employment Rights Act 1996 was satisfied.  The Claimant alleged that he should have been automatically slotted in to the new band 5 role of Patient and Public Experience Facilitator; in the alternative, as the Claimant was the highest‑scoring applicant for the new band 5 post and wished to accept the post, he should have been appointed.

The facts
2.	The essential facts are that the Claimant was employed by the Respondent from March 2003.  He had been employed on a series of fixed‑term contracts and in 2009 was employed as a Member Involvement Co‑ordinator within the Patient and Referrer Experience Team (band 6).  A restructure of the team was proposed, the material existing roles to be removed from the structure were as follows: a Patient Advice Liaison Service (PALS) complaints co‑ordinator (band 4), a position occupied by Debbie Long; a PALS manager (band 6) position occupied by Joanna Coleman; two service user/care co‑ordinators (band 6), posts occupied by the Claimant, who was full‑time, and Sue Mason, who worked three days a week; and a customer service manager (band 6), a post occupied by Sharon Rome.  The material new posts to be created were to be as follows: a complaints/PALS manager (band 6); a patient and public experience manager (band 5); a patient and public experience facilitator (band 5); a patient and public experience support worker (band 3); and a team support employee (band 3).

3.	The introduction to the Respondent’s management of organisational change policy stated:

“This policy describes the principles and procedures which will establish the framework for managing security of employment in the change process and is intended to assist staff affected by change.”

4.	Under the heading “Principles” it is stated at paragraph 2.1:

“The Trust is committed to providing maximum employment security for its staff.  However, there may be occasions when services need to be reorganised and developed which may be reflected in changes to staffing requirements.  When these occasions arise, there will be clear and fair arrangements for managing the changes and handling the redeployment and transfer of staff.  The Trust is committed to avoiding compulsory redundancies, which would be implemented as a last resort, and ensuring it maintains a workforce with the skills necessary to provide a quality of service that is responsive to the needs of all communities served.”

5.	Under the title “Methods of Avoiding Compulsory Redundancies”, stage 1 refers to workforce planning.  Stage 2 is headed “Matching People to Posts”; it refers to an appendix in respect of definition of displaced and at‑risk staff.  The appendix referred to states:

“Where staff are displaced as a result of organisational change, every effort will be made to offer suitable alternative employment.  Redeployment and retraining of staff will be a key aspect of this process.”

6.	It was agreed that the Claimant came within the definition of displaced staff.  Stage 2 of the policy went on to say:

“Automatic ‘Slotting in’
Where the substantive duties of the post holder are wholly or mainly the same in the new structure as they were in the old, and where no other staff in the same role are displaced, the member of staff should slot in automatically without competition and without detriment to their terms and conditions.
Competitive ‘Slotting in’
Where new posts are established within a restructuring these should be restricted in the first instance to those staff identified as displaced as a result of the restructure.  New posts for this purpose exclude those posts where there has been little change to the duties and/or a change in job title and/or a different line management responsibility and where slotting in is more appropriate.
For members of staff not slotting through competitive interview, redeployment then has to be considered.”

7.	Appendix 1 to the policy contains the definition of displaced and at‑risk staff, and it includes the following:

“Where a member of staff has not been appointed to a post in the revised structure which may include the following reasons:
•	where they are deemed not to have the required competencies for the appropriate levels in the revised organisational structure, and the skills gap is perceived to be too large to be met by a development plan/process
…then that person will be designated ‘at risk’.”

8.	The Respondent decided that the Claimant was not eligible for automatic slotting in.  Consultation took place.  The Claimant’s preferred choice was the new band 5 role followed by the band 6 role and then the band 3 post; Joanna Coleman and Sharon Rome gave the band 6 role as their first choice, followed by the band 5 role; Sue Mason did not apply for either of these roles and opted for voluntary redundancy.  There were then three applicants for the band 6 and band 5 roles.  Interviews were arranged for all three candidates.  The interview panel consisted of Karen Ashton, the Claimant’s line manager, Claire Tom, ward manager, and Julie Thompson, HR advisor.  The interview panel met before the interviews took place.  Ms Ashton drew up the interview questions and what was referred to as a “prompt list”, which covered what she expected a candidate to cover in the answers.  It was also agreed that a bar would be set, and if a candidate failed to achieve 50 per cent of the marks available, they would not be offered the post.  This was said by Ms Ashton to be her standard practice when carrying out interviews.

9.	One interview for each candidate took place; this covered their applications for both band 6 and band 5 roles.  With regard to the band 5 role, there were eight questions; two of these were referred to as “visionary” questions rather than “knowledge” or “competence” questions.  The scoring system was used whereby the scores were as follows: 0 = not adequate, 1 = weak, 2 = good, 3 = very good, 4 = excellent.  Sharon Rome scored 14 out of 24 for the band 6 role and 20 out of 32 for the band 5 role; Joanna Coleman scored 4 out of 24 for the band 6 role and 12 out of 32 for the band 5 role; the Claimant scored 0 out of 24 for the band 6 role and 14 out of 32 for the band 5 role.  Ms Ashton said that the 50 per cent bar that had been set was very low and it was predetermined that anyone who scored less than 50 per cent would not have met the requirements for the appointment.  She also said that, given the Claimant’s performance, it did not seem likely that he would be able to improve within a reasonable period of time with a development plan.  The scores meant that only Sharon Rome had achieved the 50 per cent bar set for both roles.  She was appointed to the band 6 role.  Neither the Claimant nor Joanna Coleman was appointed to the band 5 role.  Joanna Coleman opted for voluntary redundancy; the Claimant did not wish to apply for the band 3 role.

10.	The Claimant raised a grievance in relation to the failure to appoint him to the new patient and public facilitator role, the outcome of which was a decision to leave the original decision as it was.  The Claimant appealed against the grievance decision and the redundancy decision.  Mr Hutt, Director of Performance Improvement, heard the appeal against the dismissal and the appeal against the Claimant’s grievance; he did not uphold the appeals.  The Tribunal was satisfied that it was reasonable for the Respondent to conclude that this was not an automatic “slotting‑in” situation, and that part of the Tribunal’s decision is not appealed.

11.	The material parts of the Judgment of the Tribunal, for the purposes of this appeal, are set out in paragraphs 18 and 20 of the decision, which we cite in full:

“18. It was agreed by all the witnesses for the respondent that this was a competitive slotting in process.  It was said by Karen Ashton and Julie Thompson that it was common practice for the respondent to provide a competency bar in a recruitment and selection process.  However, when they were questioned on this it was not clear that this had been a method used by this Respondent in a competitive slotting in process.  The Management of Organisational Change policy envisages that where automatic slotting in applies, there is no provision for a competency bar.  The member of staff would slot in without competition.  The Tribunal is satisfied that the competitive slotting in within the policy is by way of competitive interview.  There is no provision in the policy for a competency bar and the Tribunal finds that to impose such a bar is outside the band of reasonable responses.  No reasonable employer acting reasonably would impose such a bar in respect of existing employees in a procedure that was stated to be a method of avoiding compulsory redundancies.  It would be appropriate for a competency bar to be imposed in respect of a recruitment policy.  It is not appropriate in a slotting in process.  The situation was entirely different from those set out in the line of authorities referred to and most recently set out in Morgan [v Welsh Rugby Union [2011] IRLR 376].  This was a competitive slotting in process under the respondent’s own procedure and, in these circumstances, the dismissal was unfair. 
20. […] the Tribunal is concerned about the imposition of a competency bar in these circumstances.  Particularly where it was decided that if an employee failed to reach the level of 50% over eight questions at an interview, then, not only would the applicant not be slotted in but would not be considered able to improve within a reasonable period of time with the benefit of a development plan.  This interpretation is wholly at odds with the respondent’s Management of Organisational Change policy.  The competency bar that was imposed was not envisaged in the policy.  In a case of automatic slotting in there would have been no interview process and, as implied by the term slotting in, the employee would have been moved to the new Band 5 post.  The imposition of the competency bar at the competitive slotting in stage meant that the process was then no longer one of slotting in and it was then dealt with on the same basis as the respondent’s normal recruitment policy where the imposition of a competency bar was entirely justified.  The Tribunal has considered this aspect and has been careful not to substitute its own view for what the respondent should have done.  The Tribunal is satisfied that the respondent’s imposition of a competency bar and the dismissal of the claimant was outside the band of reasonable responses available to the respondent.”

The appeal
12.	On this appeal the Appellant, whom we shall continue to refer to as the Respondent, is represented by Mr Andrew Webster, and the Respondent, whom we shall continue to refer to as the Claimant, is represented by Mr Michael Ford.  We are grateful to both counsel for their clear and concise written and oral submissions.

13.	The Respondent challenges the decision of the Tribunal on four grounds.  Mr Webster submits, first, that the Tribunal erred in concluding that no reasonable employer would impose a competency bar in the context of interviewing employees for a new post in a restructure.  Second, he contends the Tribunal erred in concluding that the circumstances were entirely different from those set out in Morgan and in the line of authorities referred to; this line of cases, whilst each is different on its facts, provides that where a redundancy arises as a consequence of a reorganisation, and they are new roles to be filled, the process is more akin to recruitment, with the unsuccessful candidates being dismissed for redundancy.  Third, Mr Webster submits that the Tribunal erred in concluding that the Respondent’s approach in setting a competency bar was wholly at odds with its own policy; in fact, the policy expressly envisages that competency is a prerequisite to appointment to new posts in the reorganisation.  Fourth, Mr Webster contends that the Tribunal’s conclusion that no reasonable employer would have imposed a competency bar is perverse; alternatively, the Tribunal substituted its view of what is reasonable for that of the employer.

14.	Defending the decision of the Tribunal, Mr Ford makes the following points.  The Tribunal had regard, first, to the fact that there was no evidence that a competency threshold had ever been applied before in the context of a competitive slotting‑in process such as applied to the Claimant.  Second, the imposition of the threshold had the effect that the Claimant was dealt with as if this were a recruitment process, inconsistent with the principles and meaning of the policy.  Third, the effect of the imposition of a competency bar was not only that the Claimant was not slotted into the new post but also that he was deprived of the opportunity of training for the new role with a development plan.  Fourth, there was no provision for a competency threshold where automatic slotting in is applied.  Fifth, there was no finding by the Tribunal either that the Claimant lacked the required competencies or that the skills gap was too large to be met by training; the Respondent based its view solely on performance at interview in answering the eight questions.

15.	Counsel have referred us to two recent decisions of this Tribunal: Morgan, and Samsung Electronics v Monte‑D’Cruz UKEAT/0039/11.  Monte‑D’Cruz was decided by this Tribunal after the decision in the present case.  In Monte‑D’Cruz the Claimant and one other employee applied for the post of business regional team leader following a reorganisation that created new roles.  Neither candidate achieved the minimum required score of 75, and the employer therefore rejected both candidates and resorted to making an external appointment on a consultancy basis.  Although the term “pass‑mark” was used in that case, the employer applied what has been referred to in the present case as a competency bar.  At paragraph 23 of its decision in Monte-D’Cruz this Tribunal (Underhill J, (President) presiding), said:

“We should start by setting out the principles applicable in considering the situation where a redundant employee is interviewed for an alternative position.  We gratefully adopt the lucid summary of the relevant principles in the judgment of this Tribunal (HH Judge Richardson presiding) in [Morgan] at paras 23‑26.  In that case it had been submitted, by reference to the earlier decision in Ralph Martindale & Co v Harris (UKEAT/0166/07), that ‘the selection criteria must at least meet some criteria of fairness’ and, in particular, that they must be ‘objective’.  Judge Richardson made it clear that there were no such specific rules and that Ralph Martindale was not authority for any general principle.  He also followed a number of earlier decisions that make it clear that the guidance given in the authorities about the procedures to be adopted and the criteria to be applied in selecting an employee for redundancy cannot be transposed to the process for deciding whether a redundant employee should be offered an alternative position: the two situations are different.  He said, at paragraph 36:
‘[A] tribunal considering this question must apply s. 98(4) of the 1996 Act.  No further proposition of law is required.  A Tribunal is entitled to consider as part of its deliberations how far an interview process was objective; but it should keep carefully in mind that an employer’s assessment of which candidate will best perform in the new role is likely to involve a substantial element of judgment.  A Tribunal is entitled to take into account how far the employer established and followed through procedures when making an appointment and whether they were fair.  A Tribunal is entitled [to], and no doubt will, consider as part of its deliberations whether an appointment was made capriciously or out of favouritism or on personal grounds.  If it concludes that an appointment was made in that way, it is entitled to reflect that conclusion in its finding under s. 98(4).’
Applying those principles, it was held that the Employment tribunal had not in that case acted unreasonably in offering a post to an employee who it judged to be better able to fulfil the role than the Claimant, notwithstanding that it had departed to some extent from the published interview process: that defect, of which the tribunal had been critical, could be taken into account in making the overall assessment of fairness required by section 98(4) of the 1996 Act, but it was not decisive.”

16.	Dealing with the facts of the case before the Tribunal, Underhill J said at paragraph 39:

“[…] the Tribunal’s forthright finding at paragraph 108 that the Claimant ‘was in reality the best person for the job’ is inaccurately formulated because the decision which the Appellant was considering was not whether he was better than Mr Bullock but whether either was good enough for the job: in the event it decided that neither was (see para. 7 above).  But, even as adjusted to meet that point, it would only be material if what the Tribunal meant was that the Appellant could not reasonably have scored the Appellant [sic] below 75, being the ‘pass‑mark’ – or, if it did not feel committed to the scoring system, that the Appellant could not reasonably have failed to find that the Claimant matched its requirements.  Those would be remarkable findings, particularly since the Tribunal had expressly ruled out bad faith (see para. 7 above).  Good faith assessments of an employee’s qualities are not normally liable to be second‑guessed by an employment tribunal: cf. Inchcape Retail Ltd v Symonds (UKEAT/0316/09), per HH Judge McMullen QC at para. 29.”

17.	Mr Webster submits that if the Tribunal’s finding in the present case is correct, the Appeal Tribunal in Monte‑D’Cruz might have been expected to have addressed this point when upholding the employer’s appeal against the finding of unfair dismissal.  Morgan was also a case where redundancy arose in consequence of a reorganisation and there were new different roles to be filled.  At paragraph 30 HHJ Richardson said:

“Where an employer has to decide which employees from a pool of existing employees are to be made redundant, the criteria will reflect a known job, performed by known employees over a period.  Where, however, an employer has to appoint to new roles after a re‑organisation, the employer’s decision must of necessity be forward‑looking.  It is likely to centre upon an assessment of the ability of the individual to perform in the new role.”

18.	Mr Webster submits that the competency bar in the present case was simply a threshold, a score below which signified that the Claimant did not have the ability to perform in the new role, with or without the assistance of the development plan.  Mr Ford accepts that it would not be unlawful for an employer to impose a competency bar in respect of a recruitment policy on a restructuring.  However, what distinguishes the present case from the line of authority to which we have been referred is the existence of a competitive slotting‑in process in the specific policy in the present case.  That is the distinction made by the Tribunal at paragraphs 18 and 19 of its Reasons.  The Tribunal noted that it was concerned with a competitive slotting‑in process under the Respondent’s own procedure (paragraph 18), and at paragraph 20 it made the finding that, “The competency bar that was imposed was not envisaged in the policy”.  The policy is non‑contractual; that being so, it is not binding, and the obligation on the Respondent is only to have regard to it.  However, in doing so regard must be had to the purposes and objectives of the policy.  Mr Ford draws to our attention in particular paragraph 1.2 – “Underpinning this policy is a commitment to be open and transparent in the decision making process”,  paragraph 2.1, which we have cited, paragraph 2.3, regarding the need to operate both the word and the spirit of the agreement, and also paragraph 2.12, which emphasises the need for a consistent approach.  Mr Ford submits the purposes and objectives of the policy emphasise the need for openness and clarity.

Discussion and conclusions
19.	The policy does not expressly exclude a competency bar, but the Tribunal found there was no clear evidence that a competency bar had been used by the Respondent in a competitive slotting‑in process.  At paragraph 18 the Tribunal expressed itself as satisfied that competitive slotting in within the policy is by way of competitive interview.  It is, we think, significant that Mr Ian Harrison, head of patient management systems, who heard the Claimant’s grievance, stated that:

“The policy implies that in all cases someone will be appointed.  It is recommended that this is changed, as there are situations where no candidate interviewed will be appointable.”

20.	In the light of the terms of the policy and past practice, we have reached the conclusion that the Tribunal was entitled on the evidence to conclude that the imposition of a competency bar in the context of a slotting‑in process was outside the band of reasonable responses.  Accordingly, for these reasons, this appeal fails.