The case
A Manchester employment tribunal’s decision to reject a claim of unfair dismissal in a case involving a former company secretary at JJB Sports Plc has been upheld.
Jonathan Ashby maintained that he’d been made redundant without warning or consultation.
But an appeal tribunal sitting in London at the end of last week said that JJB’s failure to warn or consult did not in itself constitute unfair dismissal. Mr Ashby lost his job in July 2010 following a company reorganisation. He’d been with the sports retailer for ten years, starting out in payroll management but later to progressing to wider roles.
These included being made head of human resources and payroll in 2007, and later being given the £86,071 title of associate director. Between June 2008 and January 2009, Mr Ashby also acted as the company secretary.
JJB Sports had been suffering falling sales and in March 2010 appointed a new chief executive, Keith Jones to try to save the business. He created a new operating board made of the heads of key functions of retail, marketing, HR and trading.
During this period of change it appointed a new HR director, Paul Mitford, without advertising the role or interviewing Mr Ashby.
Management reorganisation
During the tribunal, JJB said that it considered Mr Ashby to be a willing, co-operative and loyal employee but not cut out for the new HR Director role required by the business in the circumstances in which it found itself.
In the management reorganisation JJB decided some of the responsibilities Mr Ashby had been fulfilling could be absorbed by the payroll manager, whilst his other administrative functions could be undertaken by the legal and operations director. He was, therefore, considered to be redundant.
The appeal tribunal upheld the view that JJB was entitled to reach a view on Mr Ashby’s capabilities which resulted in it not including him in what were highly sensitive commercial decisions for the future of the business. JJB maintained that a consultation process with Mr Ashby would have been a sham that served little purpose.
Whilst with the benefit of hindsight, it conceded that Mr Ashby could have allowed to take part in a competition for the HR Director role, its counsel stressed that he could only have been considered for the role with significant training and development.
That was not appropriate for the firm at that time when in order to survive it needed to move with speed.
Mr Ashby was dismissed on 7 July 2010. When the new structure was explained to him he asked for the chance to prove that he could fill the HR role. He was told that Mr Mitford was already appointed. He received six months pay in lieu of notice together with a redundancy payment and a sum to compensate him for loss of fuel benefit.
The legal verdict
The case does show that tribunals are being sensitive to the harsh realities of the recession, where businesses faced with going under are forced to make quick and radical decisions. But this ruling doesn’t go as far as a complete sea change.
Best practice for companies is still that they need to warn and consult if they want to make a member of staff redundant. That said, there will inevitably be a great deal of focus now on the ‘utterly futile defence’ – the idea that a business can remove people without a consultation on the basis that to do so would be pointless.
There is little case law to provide guidance about when employers facing reorganisations can engage the ‘utterly futile’ defence – and sadly this tribunal did not go as far as defining these exceptional circumstances, or provide any theoretical examples for employers in similarly dire circumstances.
JJB Sports itself failed in September this year due to tumbling sales – leading to the loss of 3,500 jobs and the closure of 160 shops. Just 20 JJB shops were saved and only £24m raised for creditors through a deal with rival Sports Direct.
Michelle Gray is an associate partner at Laytons Solicitors‘ employment group.
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