Some Other Substantial Reason: An Introduction Rustom Tata - CIPD

www.dmhstallard.com 

CIPD Seminar 

The Fifth Reason: 

Some Other Substantial Reason 

23 February 2012 

A Top 100 Law Firm

Introduction to SOSR 

• Employment Rights Act 1996 s98(1)(b) 

• The fifth reason 

• ‘Mop’, ‘dustbin’, ‘employer’s charter’ 

• Category is never closed 


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Agenda 

• Introduction to SOSR 

• Categories of SOSR relating to individual 

employees 

• Categories of SOSR relating to 

reorganisations and TUPE 


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Introduction to SOSR 

• Not the reason in itself 

• Need for clarity 

• Need for evidence 

• Need for fairness 

• Two stage test: 

– SOSR justifying dismissal of employee in 

that position and 

– employer acted reasonably in the 

circumstances in treating the reason as 

sufficient for dismissal 


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Overlap with other reasons 

• Capability/failure to meet policy 

• Conduct/conscience 

• Conduct/damage to reputation 

• Redundancy/reorganisation 


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Ability to circumvent the contract 

• Pay 

• Work location 

• Working hours 

• New terms 

• Contractual obligations 

• BUT … beware the EAT 


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ACAS Code of Practice 

• Probably does not apply if genuine SOSR 

• Cummings v Siemens 

• What if it does 


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Categories of SOSR relating to 

individual employees 


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Breakdown of trust and confidence 

• Reputation – A v B 

• Reluctance to comply with equality policy – 

McFarlane v Relate Avon Ltd 

• Making of untrue allegation – Martin v 

Devonshires 

• Disagreements with employer – Hutchinson 

v Calvert 

• Relationships with colleagues – Ezsias v 

North Glamorgan NHS Trust 


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Personality clashes 

• Discussions about sex life 

– Treganowan v Robert Knee & Co Ltd 

• How does the personality manifest itself 

– Perkin v St George’s Healthcare NHS 

Trust 


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Husband and wife teams 

• Dismissal of spouse unfair 

– Kelman v G J Oram 

• Theft by spouse 

– Wadley v Eager Electrical Ltd 


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Maternity replacements – Section 106 

ERA 1996 

• Dismissal of replacement is for SOSR if 

terms of employment refer to maternity 

replacement 

• Return of incumbent must be sole reason 

for dismissal 

– Victoria and Albert Museum v Durrant 


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Loss of licence or qualifications 

• S98(2)(a) ERA – includes qualifications 

• Contravention of statutory duty – belief 

insufficient 

• Driving licence – Appleyard v Smith (Hull) 

Limited 

• Belief may be sufficient for SOSR 

– Klusova v London Borough of Hounslow 


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Third party pressure 

• Customer pressure – Scott Packing & 

Warehousing Co Ltd v Paterson 

• Acting reasonably – Grootcon (UK) v Keld 

• Importance of customer – Edwards v Curtis 

• Contractual provision – Dobie v Burns 


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Bringing employer into disrepute 

• Conviction for theft 

– Singh v London Country Bus Services 

Ltd 


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Conflict of interest 

• Potential conflict of interest counts 

• Need for harm – Nova Plastics v Froggat 

• Spouse working for a competitor – Skyrail 

Oceanic Ltd v Coleman 

• Father working for a competitor – Weal v 

Insulpak 

• Refusal to accept restrictive covenant – RS 

Components v Irwin 


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Imprisonment 

• Frustration – no dismissal 

– F C Shepherd & Co Ltd v Jerrom 

• Dismissal for SOSR 

– Kingston v British Railways Board 


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SOSR in the context of 

reorganisations, changing terms and 

conditions and TUPE 


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Re-what 

• Redundancy 

= statutory concept 

= defined in s139 ERA 1996 

• Reorganisation/restructuring 

= no legal definition 

• Reorganisation may include redundancies 

• Redundancy can occur without any 

reorganisation 


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Redundancy or reorganisation 

Redundancy 

• statutory term (section 

139 ERA 1996): 

– cessation of business 

e.g. closure of 

location 

– diminution in work or 

cessation of work – 

actual or expected 

• statutory redundancy 

payment applies 

• may trigger enhanced 

redundancy rights 

Reorganisation/Restructuring 

• change in the way the 

work is done 

• e.g. new shift pattern, 

new structure or 

hierarchy, new terms and 

conditions 

• no SRP 

• no enhanced redundancy 

payment 

• fair reason = SOSR 


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Reorganisation 

Many different flavours 

• Efficiency and cost saving measures 

• Reducing headcount 

• Changing working practices 

• Reorganising duties between employees 


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SOSR and reorganisation 

• SOSR requires genuine and substantial 

business reason 

• Employer must show why and how 

• Do not need to show quantum (e.g. 

amount of cost savings) 

• Must be clear advantage for employer e.g. 

increased profitability or efficiency 

• Reasonable in context of business and in 

relation to that particular employee 


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Importance of genuine reason 

Banerjee v City and East London AHA [1979] 

• Health Authority decided to amalgamate all 

part-time roles into full-time roles 

• Asserted justification but failed to produce 

evidence of advantages of policy or 

reasons for it 

• SOSR not made out 


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Changing working practices 

Kerry Foods v Lynch [2005] 

• Employer introduced 6-day week 

• Standardised rotas across factories 

• Standardised holiday entitlement 

• Improved output and supervision at 

weekends 

• Certain employees dismissed for refusing to 

accept new arrangements 

• SOSR applied 


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Changing working practices 

Johnson v Nottinghamshire Police Authority 

[1974] 

• Two clerks had their hours and shift 

pattern changed 

• No redundancy because no cessation or 

diminution in work 



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Changing duties and/or reducing 

numbers of employees 

Murphy v Epsom College [1983] 

• A, a plumber who did some heating work, 

was dismissed and replaced by B, a heating 

engineer who did some plumbing work 

• EAT said A dismissed for redundancy 

• WRONG!!! 


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Murray v Foyle Meats [1999] 

• amount of work is central to redundancy 

• not type of employees or number of 

employees to do it 

• reduction from 10 widget whittlers to 9 

widget whittlers ≠ redundancy unless 

widget whittling work has ceased or 

diminished (or is about to) 


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Shawkat v Nottingham City Hospital NHS 

Trust [2001] 

• Thoracic surgeon required to become dualskilled 

cardio-thoracic surgeon 

• No reduction in thoracic work 

• No reduction in number of employees 

• No redundancy 



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Redundancy vs. reorganisation 

Why does it matter 

• Identifying potential labels from outset – 

keep options open 

• Financial liability 

– redundancy payments 

– good/bad leaver provisions 

• Tactics for settlement 

• Approach to process 


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Redundancy vs. Reorganisation 

Comparison of process 

Redundancy 

Fair selection necessary 

Prior consultation required 

Obligation to offer suitable 

alternative employment 

Must offer suitable 

alternatives to employee on 

maternity leave 

Statutory re-engagement and 

trial period applies 


Reorganisation 

Selection may be irrelevant 

Prior consultation required 

Advisable to offer available 

vacancies 

No obligation but advisable to 

offer any alternatives to 

employee on maternity leave 

Statutory re-engagement and 

trial period applies 

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SOSR and changing terms and 

conditions of employment 

• What is changing 

• Is it part of the contract of employment 

• Reasonableness of employer 

• TULRCA collective consultation 


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Is it contractual 

• Terms of collective agreements not 

incorporated into contract 

– Malone v British Airways [2010] 

• Terms of staff handbook incorporated 

– Keeley v Fosroc International [2006] 

– Bateman v Asda [2010] 


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Reasonableness of employer 

• Proposed change need not be crucial to 

survival of business 

• Employer’s proposals must be reasonable in 

all circumstances 

• Whether employee was reasonable in 

refusing is relevant but subsidiary factor 

• Reasonable employer ≠ unreasonable 

employee and vice versa 


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Reasonableness of employer 

Relevant factors: 

• Reasonableness of overall proposal 

• Reasonableness of new terms 

• Degree of consultation 

• Willingness to explore/discount alternatives 


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SOSR and TUPE 

• In TUPE context most dismissals are 

automatically unfair 

• Dismissal can be fair if: 

– unconnected to transfer or 

– connected to transfer but for ETO reason 

• Fair reason can be either SOSR or 

redundancy 

• BUT changes to terms and conditions 

related to TUPE transfer ≠ SOSR 


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Summary 

• SOSR can be a useful catch-all 

• Not a substitute for a real reason 

• Not a substitute for reasonableness 


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Some Other Substantial Reason: An Introduction Rustom Tata - CIPD

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