The correct approach for the Industrial Tribunal looking at a company re-organisation is to make a finding as to the advantages to the employers of a proposed re-organisation and whether it was reasonable for them to implement it by terminating existing contracts and offering employees new ones. If there is a sound good business reason for the particular reorganisation the unreasonableness or reasonableness of the employer’s conduct has to be looked at in the context of that re-organisation.
It is not right to go through the reasoning of Tribunals with a toothcomb to see if some error can be found. The findings of a Tribunal should be looked at by the EAT ‘broadly’. If it appeared that they had applied the right test and that their conclusion was broadly reasonable it should not be interfered with.
Lord Denning MR said: ‘The question which is being discussed in this case is whether the reorganisation of the business, which the National Farmers’ Union felt they had to undertake in 1976, coupled with Mr Hollister’s refusal to accept the new agreement, was a substantial reason of such a kind as to justify the dismissal of the employee. Upon that there have only been one or two cases. One we were particu larly referred to was the case of Ellis v Brighton Co operative Society Ltd  IRLR 419, where it was recognised by the Court that reorganisation of business may on occasion be a sufficient reason justifying the dismissal of an employee. They went on to say: ‘Where there has been a properly consulted-upon reorganisation which, if it is not done, is going to bring the whole business to a standstill, a failure to go along with the new arrange ments may well -it is not bound to but it may well constitute ‘some other substantial reason’.’ Certainly, I think, everyone would agree with that. But in the present case Mr Justice Arnold expanded it a little so as not to limit it to where it came absolutely to a standstill but to where there was some sound, good business reason for the reorganisation. I must say I see no reason to differ from Mr Justice Arnold’s view on that It must depend in all the circumstances whether the reorganisation was such that the only sensible thing to do was to terminate the emp loyee’s contract unless he would agree to a new arrangement. It seems to me that that paragraph may well be satisfied, and indeed was satisfied, in this case, having regard to the commercial necessity of rearrangements being made and the termination of the relationship with the Cornish Mutual, and the setting up of a new relation ship via the National Farmers’ Union Mutual Insurance Limited.’
Lord Denning MR
 IRLR 238,  ICR 542
England and Wales
Cited – Kenneth Cobley v Forward Technology Industries Plc CA 14-May-2003
The claimant had been chief executive and a director of the respondent for many years, but was dismissed upon it being taken over. His contract of employment as chief executive provided that it was to be coterminous with his appointment as director. . .
Cited – Abadeh v British Telecommunications Plc EAT 19-Oct-2000
EAT The claimant appealed dismissal of his claim under the 1995 Act. He was a telephone operator injured after a sudden shriek in his ear. They had found him not to be disabled within the 1995 Act.
Held: . .
Cited – St John of God (Care Services) Ltd v Brooks and others EAT 8-Apr-1992
The appellant had suffered a reduction in its income. It made an offer to staff, on the point of dismissing for refusal to sign, of less favourable terms, including reduced pay and holiday entitlement and the abolition of overtime rates for weekend . .
Cited – Northgate HR Ltd v Mercy CA 13-Dec-2007
The claimant alleged that his selection for redundancy was unfair, the company having failed properly to consult its own employee consultation council and in having failed to disclose its scoring system. The company said that any such complaint . .
Lists of cited by and citing cases may be incomplete.
Updated: 22 January 2022; Ref: scu.182399