Helen Ballerino v The Racecourse Association Ltd

This appeal raises the question as to how an Employment Tribunal (“ET”) is to address claims of direct sex discrimination, pregnancy and maternity discrimination, and of automatic unfair dismissal, in the context of what is said to be a sham redundancy.

We refer to the parties as the claimant and the respondent, as before the ET. This is our unanimous judgment on the claimant’s appeal against the decision of the Reading ET (Employment Judge Anstis, sitting with lay members Ms Farrell and Ms Gibson, over seven days in October 2021 and March 2022, with an additional two days in chambers), sent to the parties on 27 May 2022. By that judgment, the ET dismissed the claimant’s claims of unfair dismissal and of sex, pregnancy and maternity discrimination, but upheld claims for unpaid holiday and notice pay. The claimant appeals against the rejection of her claims of direct discrimination and unfair dismissal, contending that, in circumstances in which the question of redundancy had been put in issue, the ET had erred in failing to address the question whether this had been a dismissal by reason of redundancy for the purposes of section 139 Employment Rights Act 1996 (“ERA”). The respondent accepts that the ET’s reasons do not set out each element of the test for redundancy, as provided by section 139, but argues that is not fatal to its decision.

The claimant appeared in person below but has been represented by Mr Pickard of counsel, acting pro bono, on this appeal; Ms Tharoo of counsel has acted for the respondent throughout.

The respondent is the trade association for racecourses in the United Kingdom and represents and supports member racecourses, operating from premises at Ascot. At the relevant time, the respondent had around 12-14 employees.

The claimant is a qualified accountant. On 1 August 2018, she started working for the respondent in the role of Financial Accountant. She was employed to work 40 days per year, looking after the formal elements of the respondent’s accounts, overseeing the day-to-day bookkeeping work, and signing off on formal management accounts and relevant statutory and regulatory accounts. The claimant largely worked from home, but would attend the respondent’s premises at Ascot as necessary. As the ET noted, the claimant’s duties were different from those carried out by her predecessor, and there was an element of uncertainty as to whether 40 days would be sufficient, and as to how this revised role would work out. As she settled into the job, the claimant had expressed the view that her work in fact required two-three days a week; this was an issue that the respondent said it would review, possibly around April 2019, when it was anticipated that a new Chief Executive would be in post.

At the time of commencing her employment with the respondent, the claimant was pregnant. On 21 December 2018 she started her maternity leave.

During the claimant’s maternity leave, from 1 February 2019, Mr David Armstrong took up office as the respondent’s Chief Executive. During the recruitment process for his role, Mr Armstrong had prepared a presentation headed “Vision for the RCA”, which had included a proposal for the respondent to play a more active role in supporting the commercial agenda across all racecourses, with data and measurement being “at the heart of the strategy”. Upon taking up his post, Mr Armstrong undertook a review which led him to identify a need for the respondent to provide more effective commercial support to its members. To address that need, he determined that a new full-time role of Business and Financial Analyst should be created. That position was advertised externally and five candidates got through the initial shortlist.

The first interviews took place in early June 2019. At that stage, as the ET found, candidates were told that the role was “slightly fluid”; it was not suggested that the job would include the claimant’s workload.

Between the first and second interviews, however, the intended role of Business and Financial Analyst was extended to include the claimant’s position of Financial Accountant, under an expanded role entitled Finance Manager and Business Analyst. The new job description for this position was drawn up by 13 June 2019, when two of the candidates were invited to second interviews, and were advised of the new title and job description for the vacancy. The second interviews took place on 27 June 2019

Meanwhile, on 14 June 2019, contact was made with the claimant and a meeting was arranged for 18 June 2019. The ET records what took place at that meeting, as follows:

In the event, the claimant did not make an application, rather it was her position that the redundancy process was a sham and that she was the subject of maternity discrimination. There was then, as the ET found, an extended stand-off between the parties, with each setting out their positions in writing, until 31 July 2019, when the respondent notified the claimant that she was dismissed with immediate effect. In the meantime, in respect of the position of Finance Manager and Business Analyst, an offer had been made to the successful candidate on 12 July 2019, referring to “a start date in August 2019 to be mutually agreed”.

Addressing the claimant’s complaint of unfair dismissal, the ET reasoned as follows:

In the circumstances, the ET concluded that the claimant had failed to demonstrate that the prescribed circumstances for section 99 ERA purposes applied to her dismissal and it rejected her claim in this regard.

The ET went on to consider the claimant’s complaints of direct discrimination, which included allegations of sex discrimination and/or pregnancy and maternity discrimination in relation to the respondent’s decision to make the claimant redundant. In considering these complaints, the ET made clear it shared the claimant’s concern as to the lack of documentation available in relation to either version of the new role; this, the ET said, had led it to “consider sceptically this introduction by the respondent of the new role” (ET, paragraph 113). The ET was also satisfied that, pursuant to section 136 Equality Act 2010, the burden of proof had shifted to the respondent (ET, paragraph 114).

Looking then at the explanation provided by the respondent, the ET referred back to its earlier conclusion (under section 99 ERA) that the new role was not a “suitable alternative vacancy” such that it had to be offered to the claimant in preference to other candidates. It accepted that the new job (in its revised form) was intended to encompass the claimant’s duties and that one of the external candidates had been told that they were the “odds on favourite” before the role had been discussed with her. Although finding the lack of documentation surprising, the ET considered that the respondent’s version of events should be accepted and that, contrary to the claimant’s case, this was not a device concocted to terminate her employment because she was on maternity leave. The ET thus accepted that there had been a plan for recruiting for one role, but, after the first round of interviews, it was considered that the claimant’s tasks should be subsumed within that role, which was, nevertheless, “almost entirely different to the claimant’s” (ET decision paragraph 120 c).

The claimant pursued claims of direct sex discrimination and discrimination because of pregnancy or maternity under the Equality Act 2010 (“EqA”). By section 13, direct discrimination is defined as follows:

In addressing a case under the EqA, section 136 provides for a shifting burden of proof, as follows:

Where it is determined that the burden has shifted to person A, it is for them to establish, on the balance of probabilities, that the treatment in issue was in no sense whatsoever because of the relevant protected characteristic; Igen Ltd and ors v Wong and ors [2005] EWCA Civ 142.

As for the claimant’s complaint of unfair dismissal, she did not have sufficient service to pursue a claim under 98 ERA, but relied on section 99, which provides that a dismissal will be regarded as unfair if the reason or principal reason is of a prescribed kind, or the dismissal takes place in prescribed circumstances. The circumstances relied on in the present case were those prescribed by regulation 20(1)(b) Maternity and Parental Leave etc Regulations 1999 (“MAPLE”), as follows:

Regulation 10 MAPLE provides (relevantly):

As confirmed in Sefton Borough Council v Wainwright [2015] IRLR 90 EAT, for the purposes of regulation 10 MAPLE, “redundancy” is to be defined in the same way as provided by section 139 ERA, that is (relevantly):

Whether or not a dismissal is by reason of redundancy is a question of fact for the ET; Shawkat v Nottingham City Hospital NHS Trust (No. 2) [2002] ICR 7 CA, per Longmore LJ at paragraphs 17 and 19. That is a question that is not, however, to be answered as a matter of impression: the ET must be satisfied that the facts of the case before it meet the statutory definition; Robinson v British Island Airways Ltd [1978] ICR 304 EAT, at p 308E-G. More specifically, where an employee loses their role in a business reorganisation that does not necessarily mean that they have been made redundant; as Burton P observed in Kingwell and others v Elizabeth Bradley Designs Ltd EAT/0661/02:

As for whether there is a suitable available vacancy for regulation 10(2) MAPLE purposes, that is also a question of fact for the ET; Community Task Force v Rimmer [1986] IRLR 203 EAT. In addressing the question of suitability, however, the EAT has held that this is to be tested by the requirements laid down by regulation 10(3); specifically that the work to be done is of a kind which is both suitable in relation to the employee and appropriate for her to do in the circumstances; Simpson v Endsleigh Insurance Services Ltd [2011] ICR 75.

Finally, as for the approach we are to take to the ET’s decision, we keep in mind the guidance provided in DPP Law Ltd v Greenberg [2021] EWCA Civ 672:

That said, where an ET has fallen into error, the EAT’s role is not to strive to uphold a decision where the reasoning reveals a fundamental error of approach; as Sedley LJ observed in Anya v University of Oxford [2001] ICR 847 CA:

For the claimant, it is observed that it was a central plank of her case before the ET that the purported redundancy in this case was a sham. As such, in order to determine her claims of discrimination and of unfair dismissal under section 99 ERA, she says that the ET had first to decide whether there was a genuine redundancy. The ET had, however, failed to address the question whether the respondent’s requirements for “employees to carry out work of a particular kind” had ceased or diminished, having failed even to define the particular kind of work that was said to have ceased or diminished. That, the claimant argues, was enough to render the ET’s decision unsafe.

The claimant further contends that this is not a case where it would be appropriate for the EAT to seek to uphold the ET’s decision notwithstanding its failure to address a key issue. The ET’s findings of fact did not show there was a redundancy situation - something that was a primary question of fact and, therefore, for the ET, not the EAT, to determine (per Shawkat). To the extent it was argued that the ET had rejected the claimant’s case that the redundancy was a sham, that could not be correct given the ET had failed to make the primary finding that there was a redundancy. As for the ET’s reference to the new role being “almost entirely different” to the claimant’s, that still failed to answer the question whether the respondent’s need for general accounting skills (the claimant’s work) had ceased or diminished (and see Robinson). It was the claimant’s case that, on the facts, there was a one-to-one replacement of her by a new (male) employee and the ET’s findings - that the roles were different and that the new role was not a suitable alternative vacancy - were not dispositive of whether there was a redundancy (by analogy with Shawkat).

Accepting that, on the facts of this case, the ET had been required to satisfy itself whether there was a genuine redundancy in accordance with section 139 ERA, but that it had not explicitly set out, and commented upon, each element of that test for redundancy, the respondent submits that, taken as a whole, that was not fatal to the ET’s decision. In respect of the claim under section 99 ERA, it was not an error of law for the ET to proceed straight to the question whether there had been a suitable alternative vacancy (effectively assuming there had been a redundancy). As for the claims of discrimination, although the burden had shifted, the ET had accepted the respondent’s redundancy explanation. Accepting that, given the way the parties’ cases were put, the ET had been required to satisfy itself that there was a genuine redundancy for section 139 ERA purposes but that it had not expressly referred to that provision, it was nevertheless clear that it had carefully considered the claimant’s claim that the redundancy was a sham, and had reached clear and cogent findings that her case was not made out.

Moreover, for the purposes of section 139, it was not the case that there could be no redundancy situation because the claimant’s duties did not cease or diminish: it was not necessary that there should always be a reduction in the amount of work done by the complainant; it could be sufficient if the same amount of work was undertaken by fewer employees or within a shorter number of working hours (per Campbell). In the present case, the respondent had identified a need for a new post to be created - a Business and Financial Analyst - and had then considered that the new full-time position could subsume both the duties envisaged for the new post and the claimant’s part-time Financial Accountant position; this could fall within section 139 ERA, as the work required could be undertaken by one person, not two.

The claims with which we are concerned for the purposes of this appeal - of direct discrimination because of sex, or because of pregnancy or maternity; and of unfair dismissal under section 99 ERA - were pursued by the claimant in the alternative. It was the claimant’s primary case that there was no redundancy and the purported removal of her job - by its being subsumed within the new post - was a sham: in reality, her duties were not expected to (and did not) cease or diminish, and the respondent still had the same requirement for employees to carry out the same financial accounting work. In the alternative, if there was a redundancy situation, it was the claimant’s case that her dismissal was rendered unfair under section 99 ERA, given the obligation on the respondent to offer her the new post as a suitable alternative vacancy (as required by regulation 10 MAPLE).

As was common ground before us, on either case, the ET was required to determine whether or not there was a redundancy, as that term is defined by section 139 ERA. Most obviously, given the claimant’s reliance on regulation 20(1)(b) MAPLE, the ET had to be satisfied that her dismissal had been by reason of redundancy for the purpose of the claim under section 99 ERA. As for the discrimination claims, while not part of the relevant definitions under the EqA (sections 13 and 18), once the ET had found that the burden of proof had shifted to the respondent, both parties accepted that it was then bound to consider whether it should accept the respondent’s explanation for the claimant’s dismissal (the less favourable, or unfavourable, treatment in issue) as being by reason of redundancy. Specifically, as Ms Tharoo acknowledged at the hearing of the appeal, that explanation was not put in general terms, as relating to a (non-discriminatory) business re-organisation, but was specifically put on the basis of there having been a redundancy as that term is defined by section 139 ERA. Notwithstanding the fact that the question of redundancy had thus been identified as a key issue in the claims, it was also agreed before us that the ET did not specifically address the statutory test laid down by section 139 ERA. The question for us is whether that renders the ET’s decisions unsafe.

Accepting that the claimant’s claim under section 99 ERA required (per regulation 20(1)(b) MAPLE) that she had been dismissed by reason of redundancy (such that this was the first issue raised by that claim), the respondent contends that the ET was nevertheless entitled to go straight to the question whether there was a suitable alternative vacancy; as it had effectively assumed redundancy for these purposes, there could be no prejudice in the ET’s adoption of this course.

In some cases, we can accept that this may be correct: in a claim under section 99 ERA, where reliance is placed on regulation 20(1)(b) MAPLE, if an ET proceeds on the basis that a dismissal is by reason of redundancy, as that term is defined by section 139 ERA, it may not give rise to any error for it to move straight to the question whether there is a suitable alternative vacancy for the purposes of regulation 10 MAPLE. As always, however, much will depend on the particular facts of the case. In the current proceedings, it is the claimant’s case that there was a degree of overlap between the question at the heart of section 139 - what was the particular kind of work for which the respondent had a diminishing requirement? - and the determination of whether the new role was a suitable alternative vacancy. Having failed to engage with the test laid down by section 139, the claimant argues that the ET could not properly assess the suitability of the new role as an alternative vacancy.

On the particular facts of this case, that seems to us to give rise to a valid objection. Although the ET accepted the respondent’s evidence as to the business re-organisation that Mr Armstrong had brought about, it did not engage with the requirements of the test under section 139 ERA. In a case where the claimant’s role was itself relatively new, and there was some uncertainty as to how many hours it actually required, the question whether there was a redundancy could not simply be answered as a matter of impression; the ET needed to address the terms of the statute (per Robinson). The fact that there had been some form of re-organisation, and/or an additional requirement for different skills, did not necessarily mean there was a redundancy (see per Kingwell and Shawkat). Further complexity arose from the fact that a new role had been added to the organisation; taken together with the uncertainty regarding the number of hours required for the work undertaken by the claimant, this was not a case where redundancy could necessarily be assumed from an apparent reduction in headcount (see Campbell). Moreover, although the finding of redundancy for the purposes of the claim under section 99 ERA was a necessary first step, we accept the claimant’s point that, in the particular circumstances of this case, it was also likely to be relevant to the ET’s determination of the subsequent question, as to whether the work to be done as Finance Manager and Business Analyst would be of a kind that was both suitable and appropriate for the claimant.

As the claimant acknowledges, the question of the suitability of the new role was a matter for the ET to assess. For our part, we can see that it might ultimately be entitled to find that the additional duties encompassed by that position - the business analysis required, not simply the financial accounting that the claimant had undertaken - meant that it was neither suitable nor appropriate, but we do not think we can say that this would inevitably be so. We also accept the claimant’s point that that decision ought to be informed by a proper assessment of the constituent elements of the role, which, in turn, might depend upon prior findings made under section 139 ERA.

Of course, it was (and remains) the claimant’s primary case that the proper application of section 139 ERA would in fact lead the ET to conclude that there was no redundancy: her dismissal was an act of less favourable, or unfavourable, treatment because of her sex or the fact that she was on maternity leave. In those circumstances, it is contended that the need for the ET to consider whether there was a genuine redundancy for section 139 purposes ought to have been all the more apparent.

In this regard, we note that this was not a case where the respondent was relying, in general terms, upon a business re-organisation that had led to the removal of the claimant’s role; rather, as Ms Tharoo acknowledged, its explanation was more specific, being firmly put on the basis that the claimant’s position had been rendered redundant, as that term is defined by section 139 ERA. Pursuant to section 136 EqA, having found that the burden of proof had shifted to the respondent, the ET was required to determine whether it had made good its non-discriminatory explanation for the treatment in question. The explanation in this case was that the claimant was redundant; something the claimant had, however, denied. In rejecting the claimant’s case that incorporation of her position into the new role had been “a device”, the ET had, more generally, dismissed her argument that the respondent’s explanation - that her position was redundant - was a sham, without actually determining whether or not there had really been a redundancy.

We do not suggest that a respondent might not be able to rely on a business reorganisation as demonstrating a non-discriminatory explanation for a dismissal, but the particular reliance on there having been a redundancy is a striking feature of this case. Equally, we accept that it might have been open to the ET to have found that the requirements of section 139 ERA were made out, and the claimant’s dismissal was indeed by reason of redundancy; that would be a question of fact for the ET to determine. The difficulty is that the ET did not address the questions posed by section 139 in order to determine the issue of redundancy that had been raised in this case; specifically, it did not ask itself whether the respondent’s need for employees to carry out financial accounting work had ceased or diminished (or was expected to do so).

Mindful of the need to read the ET’s decision holistically, and to be slow to conclude that it has failed to apply the relevant principles, we note that there is no indication that the ET reminded itself of the test for redundancy under section 139 ERA, albeit that it is common ground before us that it had been required to satisfy itself that there was a genuine redundancy situation as defined by that provision. In the circumstances, we consider that this is a case where the ET’s reasoning fails to demonstrate that it has engaged with what is agreed to be the relevant question at the heart of the claims before it (per Anya). We therefore allow the appeal and, accepting that the question of redundancy is one of fact for the ET to determine, must remit this matter for reconsideration.

For the claimant it was urged that this should be to a differently constituted ET, and, having had the opportunity to consider our judgment in draft, additional written representations have been made by Mr Pickard on this issue. We have carefully considered all that has been said, but we are not persuaded that it is necessary to direct that this remission must be to a different ET. Having had regard to the guidance in Sinclair Roche & Temperley v Heard [2004] IRLR 763 EAT, we consider the proportionate course is to remit this case to the same ET (to the extent that remains possible) for reconsideration of the claimant’s claim of automatic unfair dismissal under section 99 ERA and, also in relation to her dismissal, of her claims of direct discrimination because of sex (section 13 EqA) or pregnancy and maternity (section 18 EqA). The ET made a number of findings that have not been the subject of any challenge and that makes it more convenient for the same panel to consider the case on remission; moreover, although some time has now passed since the ET hearing, we consider that the panel members are likely to be able to remind themselves of this case and to complete their task by considering the issues we have identified in this judgment. There is no reason to doubt the professionalism of the ET and, whilst we concluded that it failed to engage with what was agreed to be the relevant question at the heart of the case, this is not a case where we have found that its conduct of the hearing, or its reasoning as a whole, was “wholly flawed” or that there was a “complete mishandling” of the case. In our judgement, to the extent it remains practicable, the same panel will be best placed to revisit this case, to make the necessary findings on the issue of redundancy, and to then proceed to determine the claims in question. This remission does not provide the ET with a “second bite at the cherry”, but with the opportunity to complete the exercise required, by asking whether there was in fact a genuine redundancy.