Employers afforded wide measure of flexibility in redundancy pool selection

30 July 2009
  

In the case of Lomond Motors Ltd v Clark, the EAT, earlier this month, confirmed that a broad degree of flexibility should be granted to employers in determining the pool of employees from which those to be dismissed by reason of redundancy are to be selected.

Background
Mr Clark was employed by Lomond Motors Ltd (LM) as an accountant in November 2000. LM had two garages and, in 2006, acquired two further sites. LM established a subsidiary company, Lomond Motors (East) Ltd (LME), to operate the new sites. Mr Clark began working at one of LME’s sites, as branch accountant, in early 2007, although LM remained his employer. There was another accountant covering the second LME site and one accountant responsible for both of LM’s sites.

In 2008, Mr Clark was made redundant following a commercial decision by LM that both parts of the business should each have only one accountant. The selected pool for redundancy comprised the two LME accountants, one being Mr Clark, who was made redundant based on his shorter length of service. He brought an unfair dismissal claim alleging that the selection pool was incorrect and should have included all three accountants.

Decision at the Employment Tribunal
The Tribunal held that the decision to limit the pool for redundancy selection fell outside the band of reasonable responses. The basis of the Tribunal’s reasoning was that Mr Clark was not employed by LME, his contract contained a mobility clause, he had not been at the LME site for very long and all three accountants performed a similar task. LH appealed to the EAT.

Decision at the Employment Appeal Tribunal
The EAT allowed the Appeal. It concluded that the Employment Tribunal had erred in its approach by substituting its own view for that of the employer, which had acted reasonably in determining what the redundancy selection pool should have been.

The EAT held that a number of factors, not taken into account by the Tribunal, supported a pool consisting of just the two LME accountants including the facts that Mr Clarke had been at the LME site for over a year, LME was a wholly owned subsidiary of LM and a “separate work centre” and that it was LME that had a surplus accountant, not LM.

Taking all these factors into account, the EAT held that it was reasonable to restrict the selection pool and the dismissal was not unfair.

Comment
This is a useful decision for employers confirming that, when deciding whether he has acted within the band of reasonable responses open to an employer in a redundancy situation, he is to be granted a broad degree of flexibility in its determination of the redundancy pool.