OUTER HOUSE, COURT OF SESSION

 

[2005] CSOH 47

 

A262/04

 

 

 

 

 

 

 

 

 

 

 

OPINION OF LORD WHEATLEY

 

in the cause

 

KENNETH LOY

 

Pursuer;

 

against

 

ABBEY NATIONAL FINANCIAL AND INVESTMENT SERVICES PLC

 

Defenders:

 

 

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Pursuer: L McNeill; Lindsays, W.S.

Defenders: Sandison; DLA

 

21 March 2006

 

[1] The pursuer was born 17 August 1960 and is currently a self-employed financial advisor. He was formerly employed by the Scottish Provident Group from 25 October 1982 until 31 July 2001, when his employers were taken over by the defenders. The defenders are a company incorporated under the Law of Scotland and are part of the Abbey National Group of companies. Their company structure includes another insurance company, the Scottish Mutual Group, which was acquired by the defenders in about 1992, and which continued to operate as a separate company thereafter. The defenders are responsible for the actions of the officials of the Scottish Mutual Group.

[2] During his early years of working with the Scottish Provident Group, the pursuer worked in a number of positions concerned with his employers' pensions business. In 1995 the group moved out of pensions works, and the pursuer spent two years managing this withdrawal. In 1997 he joined what his employers called their national accounts team, whose specific remit was to build up the group's current insurance business with existing major company accounts in the financial services business in the United Kingdom.

[3] The Scottish Provident Group, like many other policy providers, did not in the main sell its insurance policies directly to the public. Instead, these policies were normally sold through the agency of independent financial advisors. By 1997, a number of independent financial advisors who operated within the insurance business had, for legislative and business reasons, formed themselves into large groups, which the Scottish Provident Group and others in the insurance industry described as accounts. These accounts would commonly offer a range of insurance policies of various kinds and from different companies to sell to members of the public who came to them for financial advice. Each group of independent financial advisors would have a set of criteria which the various policies they were prepared to sell would require to meet. Thereafter, it was up to the independent financial advisors to decide which particular insurance policies were best suited to the needs of their individual clients.

[4] In giving up their pensions work, the Scottish Provident Group had decided to concentrate their energies on what are called protection insurance policies. These are policies concerned with life insurance, illness insurance or protection from loss of income. In order to build up this business, the Scottish Provident Group determined on a different approach to marketing their policies compared with that traditionally adopted by other companies working in the same field. In particular, the group appointed five national account managers, of which ultimately the pursuer became one in 1997. Each manager was allocated a panel of four or five major accounts (otherwise large firms of national independent financial advisors) to service. Normally in this area of business an insurance company would give an accounts manager forty or fifty such accounts to look after. The purpose of restricting the number of accounts in this way by the Scottish Provident Group was to allow their national account managers to pay far more attention, and to provide a far more detailed service, to the accounts allocated to them.

[5] National accounts managers employed by other companies in this area of the insurance business concentrated simply on placing their policies on the list of products sold by the independent financial advisors. The Scottish Provident Group however, in their distinctive approach, went to considerable additional lengths through their national account managers to encourage their accounts to sell Scottish Provident Group policies to their customers, an exercise not undertaken by their rivals. Also, the national accounts managers actively sought out what further Scottish Provident Group insurance products could be made available through their accounts within the constraints of their company's overall policy. The national accounts managers of the Scottish Provident Group therefore took a particularly close interest in developing their personal connections with their accounts, and regularly fostered and supported those accounts in order to secure the placement of Scottish Provident Group insurance products within the market place.

[6] The panel of accounts managed by individual national accounts managers comprised firms of independent financial advisors of different sizes. To assist in the management of this operation, Scottish Provident Group had a team of sales consultants under the direction of a regional sales manager in each of their major regions, who among their other duties were also involved in servicing the various national accounts looked after by the pursuer and his colleagues. Regional sales managers were at a level lower than the national accounts managers who reported directly to the Group Head of Sales, who was a member of the board.

[7] As a consequence of these working practices, the Scottish Provident Group national accounts managers regularly dealt directly with the senior executives of their accounts and were empowered to make instant decisions in respect of providing additional insurance products through these accounts. They were also able, within limits, to agree commission rates, which again was unusual. Also, the pursuer and his colleagues had a significant level of control and discretion over how they handled or worked the various accounts which were allocated to them. For the purposes of the present action, the principal features of that control were that they had ultimate authority on the selection of the members of the sales team (the sales consultants) who were to work within each individual account. In the event that it was thought that a particular member of the sales team was not suitable to be part of the service team for a particular account, a consultation process was conducted, after which the national accounts manager had the authority to make the final decision as to where that employee would work. Secondly, the national accounts managers were given budgets for training and encouraging new business, over which they had complete control. In exercising their discretion in this area, they decided what training needs were required for the various personnel within their accounts whom they hoped would place their products with the public, what events and conferences should be put on in order to present and promote the products which the Scottish Provident Group had to offer, and what opportunities should be offered to encourage the expansion of the original business which they had placed with their various accounts. In all of these areas, the Scottish Provident Group national accounts managers, although they were always required to report to the company's Head of Sales, were allowed considerably more latitude than would have been the case in other companies. As a result of these working practices, the Scottish Provident Group achieved significant levels of success in this restricted field of business. The national accounts managers saw their control and ownership of the accounts as being essential to the success of the company.

[8] In about October 2000, it became known that the Scottish Provident Group was to be acquired by the Abbey National Group of companies, and a merger eventually took place on 1 August 2001. As indicated above, Abbey National Group of companies had some years earlier acquired another mutual insurance institution, the Scottish Mutual Group. It became clear that the Scottish Mutual Group were to be given the responsibility, following the merger, of handling the combined business of themselves and the Scottish Provident Group. At the time of the merger, the Scottish Mutual Group did relatively little protection insurance work, but had a significant business in the provision of regulated financial services, such as pensions and various forms of investments. They also operated through a network of independent financial advisors accounts, but their direct involvement with those accounts was significantly less than that practised by the pursuer and his colleagues, and the accounts were managed by the equivalent of regional sales managers in the Scottish Provident Group. The pursuer and the other national accounts managers were aware prior to the merger that the Scottish Provident Group had very different ways of handling their various business accounts compared with those adopted by the Scottish Provident Group.

[9] As part of the amalgamation of these various businesses, a large number of integration meetings took place in order to combine the efforts of the two work forces of the merged groups. These meetings however did not involve the national accounts managers in any way until shortly before the date of the merger. It became clear that there was no position in the Scottish Mutual Group equivalent to the national accounts managers employment by Scottish Provident. However, the post of regional sales manager was more or less the same in both groups.

[10] The national accounts managers of the Scottish Provident Group attempted to discover what role they would have following the merger by questioning their Head of Sales, Duncan Forbes, who was involved in the integration process, without success. On 1 August 2001, the national accounts managers and such former employees of the Scottish Provident Group who had survived the merger, formally began their employment with the defenders.

[11] Prior to the merger, the Scottish Provident Group had about five regional sales managers throughout the country. The Scottish Mutual Group had considerably more, perhaps twelve or fifteen. All of the regional sales managers employed by the Scottish Provident Group worked in offices in towns where there were also offices of the Scottish Mutual Group. In the course of the integration process it was decided that the regional sales managers formerly employed by the Scottish Provident Group should be offered the chance to compete for the positions currently occupied by the regional sales managers of the Scottish Mutual Group. The reason for this was that it was considered pointless to have two offices in the same location. None of the regional sales managers employed by the Scottish Provident Group were successful in these applications, and all were thereafter offered redundancy settlements in terms of the Scottish Provident Group redundancy agreements. The regional sales managers had in fact been offered such terms in advance of any applications which they might wish to make, an offer which some of them accepted. These offers were made on the basis that the defenders recognised that under the merger arrangements, the posts occupied by the Scottish Provident Group regional sales managers would become surplus to requirements and therefore any regional sales manager who could not find a position in the new company would be redundant. No such offer of redundancy was made to the national accounts managers.

[12] At the time of the merger, therefore, the pursuer and his colleagues were concerned about their future in the new company. They were particularly anxious that if they were to continue to be employed by the defenders, they should have the same duties and responsibilities, and level of income, as they had prior to the merger. They were also concerned that they should be given the same treatment as the regional sales managers in respect of redundancy payments if suitable alternative employment was not to be made available to them. In these circumstances, they wrote a letter dated 20 July 2001 enquiring about their position to John Campbell, the sales director of the Scottish Mutual Group, who was in charge of the integration process. In particular, they sought in terms of that letter to have confirmed that they would retain and control ownership of their accounts. They also specifically asked for equal treatment to that given to the regional sales managers in respect of the question of redundancy.

[13] Following this letter, a meeting was held on 25 July 2001 between the representatives from the defenders and the pursuer and another of the former national accounts managers from the Scottish Provident Group. Although, among a number of other matters, the question of the future control and ownership of accounts which up to that point had been managed by the national accounts managers was discussed, no resolution of that matter was reached. There was then a further meeting between representatives of the defenders and most of the national accounts managers, including the pursuer, on 13 August 2001. The principal officials attending on behalf of the defenders were Mr Campbell and Ray Pickett, who was designated as the Scottish Mutual Group Head of National Accounts. At this meeting the pursuer again stated that he wished to be given the same options of staying within his former job description under the new merger arrangements or being offered redundancy terms, similar to the Scottish Provident Group regional sales manager. In response, Mr Campbell (who was clearly committed not to offer redundancy terms to the pursuer and his colleagues), made it plain that he regarded the job done by the former national accounts managers at the Scottish Provident Group as being, in effect, finished. The pursuer and his colleagues then emphasised that they wished to retain control of their accounts if they were to remain employed by the merged groups, and in particular that they wished to keep the power to appoint and remove sales consultants from particular accounts if they thought that was appropriate and in the best interests of servicing those accounts. Mr Campbell refused to accede to this request and indicated that this matter was not negotiable. He also maintained that the matter was of little significance. The pursuer and his colleagues also argued that they should retain control over the conference and training budgets which were designed to service and support their accounts. Mr Campbell maintained that the allocation of such resources would henceforward be the responsibility of the Scottish Mutual sales and marketing account, and this would remain the position under the merger agreement. Again, as far as the defenders were concerned, this issue was non‑negotiable and also of little significance. In the course of this meeting, towards the end, Mr Campbell dismissed the other Scottish Mutual employees, and attempted to negotiate privately with the pursuer and his colleagues, with no success.

[14] On 16 August 2001, Mr Pickett wrote to the national accounts managers, following this meeting, claiming that all outstanding matters between Scottish Mutual Group and the former Scottish Provident Group national accounts managers had been resolved. However, he later also again made it clear that the defenders proposed to change the arrangements under which the national accounts managers operated their accounts, particularly in the matter of appointing or removing sales consultants from servicing particular accounts. In future, the ultimate responsibility for replacing or removing sales consultants would now be transferred to the Scottish Mutual Group sales managers who would be working with the national accounts managers on their accounts. Again Mr Pickett added that he thought that this change in the pursuer's working practices was minor.

[15] The five national accounts managers formerly employed by the Scottish Provident Group responded to Mr Pickett's letter of 16 August by a letter written by one of their members on their behalf dated 21 August 2001. Among other matters, they emphasised that they did not consider that the proposed altered arrangements were minor in character. They also claimed that they were being offered alternative, and not suitable, employment. On 23 August 2001, the pursuer wrote a formal grievance letter of complaint to a Mr Pottinger, who was the Chief Executive of the defenders. In his letter he indicated that he considered that his former employment had gone and that he was being given a lesser role in the new merged company as a business development manager (the new title which the defenders proposed for the pursuer and his colleagues). On 23 August 2001, Mr Pickett again wrote to the pursuer indicating that ultimate control over which sales consultants were appointed to or removed from particular accounts were to be the responsibility of Scottish Mutual Group Executive and not the pursuer. At the same time he said that his intention was that the national accounts managers should retain ownership of their accounts. He added that there was no question of redundancy. On 28 August 2001, the pursuer and his colleagues had a meeting with Mr Pottinger. They made a number of complaints and argued that they thought that their job was finished, and that they had not been given the same options in respect of redundancy as other former employees of Scottish Provident Group. They again emphasised that they had formerly controlled the budgets for training and related matters and that they also controlled the placing of sales executives to individual accounts. They underlined that this was a key part of their management of the contract and were not prepared to accept their old job with changes. On behalf of the defenders, Mr Pottinger insisted that he still wished to retain the services of the national accounts managers, which he saw as being essential to the continued prosperity of the defenders' business. There was further correspondence between the various parties, but the net effect of these various negotiations was that the defenders and the Scottish Mutual Group on the one hand, and the five national accounts managers (including the pursuer) on the other continued to share a fundamental disagreement about the nature and extent of the role which the national accounts managers performed with the Scottish Provident Group, and what that role should be under the proposed new arrangements. There was clearly a complete failure of meeting of minds in respect of these matters which was compounded by a lack of clarity, and a total unwillingness by each side to consider the other side's position.

[16] On 24 September 2001, the pursuer eventually tendered his letter of resignation. He had been given details of his budget for training on related matters in respect of his accounts in the sum of г128,000, but discovered on examining the budget that all the money had already been allocated, and in effect, spent, by other officials within the Scottish Mutual Group. He thereafter raised proceedings against the defenders for unfair dismissal and in April 2003, the defenders paid to the pursuer an agreed sum of г30,000 in full and final settlement of that claim.

[17] In these circumstances, the pursuer's counsel submitted that the pursuer was entitled to the remedy he sought on the basis that, following on the merger between the Scottish Provident Group and the defenders, the pursuer had been made redundant. The pursuer's position throughout was that he wanted to do the same job as he had done in his former employment with the Scottish Provident Group, and if that was not to happen, he should be entitled to be regarded as redundant. Pursuer's counsel specifically accepted that the defenders wished to retain the services of the national accounts managers following the merger although, he maintained, they did not want the managers to do their old job. The question at issue therefore, if I understood his submissions correctly, was whether the negotiations between the pursuer and the defenders should have taken place with the question of redundancy payments being "on the table" as a matter of good faith. However, counsel argued that the pursuer had not gone into these negotiations simply as a cover to obtain a redundancy package. He believed that his original job had become redundant because, following the merger, there were significant changes to the conditions which applied to the performance of his duties. The two particular circumstances which were different, and on which he relied on in the present case, were that he was not to have ultimate control over the selection of which sales consultants should be attached to the various national accounts under his direction, and secondly he would no longer have any discretion over how his training and entertainment budget was to be spent.

[18] It was however conceded that this was not a case of unfair or constructive dismissal. The pursuer maintained that at the relevant and material times the defenders, particularly through their officials Mr Campbell and Mr Pickett, were aware that there were significant differences between the nature of the job which the pursuer had formerly done with the Scottish Provident Group and the job which they proposed he should perform with the defenders following the merger. Although they maintained that these differences were of little significance and that the real issues raised by the pursuer during these negotiations concerned different matters, this was not truly the case. Pursuer's counsel argued that when the pursuer submitted his letter of resignation on 24 September 2001, on learning that his training and allocation budget had already been spent by others, he correctly appreciated that his former position had now become redundant. The pursuer's conduct at this time was entirely reasonable. Although the pursuer was not relying on the fact that there may have been problems about his future salary levels, and that his former powers to fix commission rates for some of the personnel employed by his accounts had been removed, all of this material was relevant in considering whether the pursuer had acted reasonably. This was particularly so in the light of the defenders' claim that the pursuer had not so acted, and indeed had acted in bad faith, that he had only been angling throughout for a redundancy package, and that he had not genuinely wished to remain in the defenders' employment.

[19] Pursuer's counsel then submitted that there were two points in the history of the negotiations between the pursuer and the defenders when the defenders should have offered the pursuer a redundancy package. The first occasion was at the meeting in August when Mr Campbell asked the other employees of the Scottish Mutual Group to leave the meeting and then engaged in a private discussion with the pursuer and the other former national accounts managers. At that point, counsel argued, it was clear that the differences between the parties was now significant, and Mr Campbell in effect confirmed this by accepting that what was being offered to the pursuer was a new job. Mr Campbell had indicated in particular that he agreed that the pursuer's former job was now finished, and Mr Pickett's attempts in evidence to explain Mr Campbell's stated position on this matter as merely indicating a change in the title of the position was ludicrous. The second occasion when redundancy should have been offered was at the point when Mr Pickett himself was asked to intervene later in August. If the defenders had offered the pursuer redundancy at that point it would have been accepted. That the job was now in effect a different one was evidenced by the fact that the national accounts managers had been left to the last of all of the Scottish Provident Group employees whose position required to be negotiated. Further, counsel argued, delivery of training under the relevant budget was a specific part of the pursuer's former job description. So when the changes were insisted upon by the defenders, the pursuer's former position had become significantly diminished and indeed redundant. The regional sales managers jobs had also changed in a similar fashion; they did not have to apply for new jobs with the defenders in order to qualify for redundancy payments. Accordingly, the national accounts manager's job was specific to the Scottish Provident Group, and no longer existed under the merged company. In these circumstances, the pursuer was entitled to a redundancy payment from the defenders.

[20] For the defenders, counsel submitted that the pursuer's case was simply misconceived. To qualify for redundancy payments, the pursuer required to demonstrate that he had been dismissed from his employment by reason of redundancy. In fact, the pursuer makes no such case. More significantly however, the legal definition of redundancy did not appear to assist the defenders' claim. Section 139(1) of the Employment Rights Act 1996 provides:

"... an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to ... the fact that the requirements of the [business for the purposes of which the employee was employed] for employees to carry out work of a particular kind ... have ceased or diminished or are expected to cease or diminish."

What this means has been authoritatively settled in the case of Murray v Foyle Meats Ltd [2000] 1 AC 51, where it was decided that the question of whether the requirements of the business for employees to carry out work of a particular kind had diminished was a question which addresses itself simply to an economic state of affairs and was not to be decided on whether the work in question done by the employee fell within the terms of the contract, or to the precise work which he was actually doing when the termination of employment occurred. It accordingly followed, counsel submitted, that even material and unilateral changes by an employer to an employee's terms and conditions of employment, to the extent that the employee is entitled to regard himself as constructively dismissed from his former employment, does not necessarily mean that such dismissal is by reason of redundancy, unless the changes are referable to the economic state of affairs already referred to. This distinction, counsel maintained, appeared to have been not understood by the pursuer and his colleagues, who throughout the negotiations with the defenders maintained that the unilateral changes they had understood were to be imposed on their job description by the defenders meant that not only were they to be constructively dismissed, but that these changes led in addition to their being made redundant. They failed to appreciate that irrespective of what changes there may be to the job description, the job of servicing the national accounts would remain in effect in the same form, and would require as many employees as before to provide that service. Under the merger arrangements, there was no question that the work done on the national accounts formerly operated by the pursuer and his colleagues was to cease or diminish, or was expected to cease or diminish.

[21] Counsel for the defenders then argued that there was a further flaw in the pursuer's case. The pursuer did not offer to prove that the changes to his working conditions insisted on by the defenders were ways of working on which he was entitled to insist should be retained in terms of his contract of employment. Without such a case the pursuer could not begin to establish a claim of any kind against the defenders. Further, the pursuer appeared to suggest that the defenders acted in a variety of ways so as to destroy the relationship of trust and confidence which ought to exist between employer and employee. However, this could only be relevant to a claim for constructive dismissal, in respect of which this action is not concerned. Indeed he has already lodged and settled a claim for constructive dismissal elsewhere. The pursuer has therefore not established that there was any positive obligation on the defenders to make redundancy payments to him.

[22] Defenders' counsel further submitted that the only other grounds on which the pursuer might advance a claim in the present case was that the defender required to offer various employees a measure of equal treatment, on the basis that all such employees were in a truly equivalent position. In the present case, therefore, the pursuer had to prove that his situation was so similar to the regional sales managers formerly employed by the Scottish Provident Group, that a failure on the part of the defenders to offer him the same redundancy options which had been offered to the regional sales managers represented such an act of caprice on the part of the defenders that it breached the requisite relationship of trust and confidence between employer and employee. Reference was made to Transo Plc v O'Brien [2002] ICR 721. However, the pursuer's case in this respect, counsel maintained, was fatally flawed. There was no suggestion in the evidence or on record as to how the regional sales managers came to be in a similar position in their employment with the Scottish Provident Group to that occupied by the national accounts managers. Such evidence as there was indicated significant differences between the two positions. There was no doubt on the evidence that in the circumstances of the merger there were then too many regional sales managers in the combined group and that some would therefore find that their positions had truly become redundant. This was not the case with the national accounts managers. Finally, counsel argued, the evidence of the national accounts managers themselves indicated that they considered that there jobs were significantly different from the posts occupied by the regional sales managers. In all the circumstances, counsel submitted that the pursuer had simply failed to make any relevant case for a redundancy based payment and decree of absolvitor should be pronounced.

[23] I have no doubt that in this case the submissions of the defenders should be preferred. The basis of the pursuer's claim was that he was in effect made redundant because the job he was offered by the defenders following the merger was significantly different from the job which he had previously done for the Scottish Provident Group. It was accepted that the defenders took over all of the responsibilities and liabilities of the Scottish Provident Group following the merger, and would be liable for any claims arising out of the termination of the pursuer's employment. Accordingly, if the effect of the merger was that the pursuer's position had in fact became redundant, then the defenders would be responsible to make the appropriate payments to him in that regard.

[24] The alterations relied on by the pursuer as indicating that the nature of his employment had changed in a significant way were that he had lost exclusive control of allocating particular sales managers to the individual national accounts which he controlled, and also that he no longer had control over the training and education budget that was allocated to those accounts. Further, the pursuer suggested that the defenders acted in a way that destroyed the relationship of trust and confidence which ought to exist between employer and employee. I am still unclear as to whether this alleged breach was said to have entitled the pursuer to claim redundancy payment, or whether this part of the evidence was to be directed at refuting the defenders' claim that the pursuer had acted unreasonably, but for present purposes I propose to assume that it is part of the pursuer's substantive case. Thirdly, and finally, the pursuer claims that he was entitled to be treated in the same way as the regional sales managers formerly employed by the Scottish Provident Group, who were given redundancy packages from the defenders following the merger.

[25] In each of these arguments, I have concluded that the pursuer has failed to make out any sort of case. Firstly, the pursuer did not at any time fully explain the reasons why his claim for redundancy came to be formulated; why, in other words, the circumstances demonstrated that he was entitled to claim the status of redundancy.

The only basis for establishing a case of redundancy in general terms is by reference to the section of the statute which currently defines the term, namely section 139(1) of the Employment Rights Act 1996. The only basis for the claim in the circumstances of this case proposed by the pursuer was that the nature of his job was set to change in two material respects under the new arrangements put in place by the defenders following the merger. But, as the defenders' counsel submitted, redundancy in these circumstances does not automatically follow simply because of changes in a way a job is done. The statutory definition of redundancy cited above envisages that redundancy can only arise when the requirements of the employer's business for employees to carry out work of a particular kind have diminished or ceased. In the present case, there was no suggestion that the work which the pursuer was expected to do in the merged company had in any way ceased or diminished; all that was proposed, at best for the pursuer, was that the work would be done in a different way. As Lord Clyde points out in Murray v Foyle at p.59H to 60A, in dealing with the relevant statutory entitlement to claim redundancy:

"It is not to the actual contractual arrangements which the employees have made that the paragraph directs attention but to the requirements of the business. The requirements of the business may call for a particular number of employees and for employees or particular skills and abilities. But the contractual provisions which the employer may make with the employees are not necessarily a requirement of the business; they are rather a means whereby the requirements of the business in respect of the workforce may be met."

[26] In the present case, while I have no doubt that the changes in the working practice which the pursuer describes and relies on were significant to him in terms of the way in which the defenders had decided that his job required to be done, those changes had no real bearing on the nature of the job itself. The evidence in the case, which was largely uncontested save in insignificant details, demonstrated that the national accounts managers would remain responsible for servicing their allotted accounts substantially in the way which they had done by the Scottish Provident Group. The number and identity of the accounts to be allocated to the pursuer and his colleagues would remain the same as before. At one point in his submissions, I understood the pursuer's counsel to accept that this was the case. The unique Scottish Provident Group approach of concentrating the attention of the managers on just a few accounts, but putting far more work into managing those accounts to guarantee a greater return of business, was in effect to be maintained under the new arrangements. The pursuer and his colleagues may have been correct in their view that the removal of their power to allocate sales managers to particular contracts, and of their exclusive control over the training and entertainment budgets, would make their job more difficult to do, but that is of no particular significance in the question of whether their positions would become redundant. The national accounts formerly owned by the Scottish Provident Group still required to be managed, and the nature of that business was not going to diminish or cease. Indeed, the defenders indicated that they wished to increase that source of business and whether their ability to realise that ambition at the time may or may not have been realistic it would be unreasonable to hold on the evidence that they had any other intention. In this respect, I note that the only national accounts manager who stayed with the defenders appears still to be doing the same job as he formerly did in the Scottish Provident Group. If it is correct that the question of redundancy must be linked to a diminution or ceasing of business (and no alternative submissions were made in this respect) then the pursuer has failed to demonstrate that his departure from the defenders' employment, while it might amount to constructive dismissal, also came about because his position as a national accounts manager had become redundant. A further simple test of underlining this inevitable conclusion is this. If the merger had not taken place, and some two or three years after introducing his original approach, Mr Forbes had altered the working practices of the national accounts managers within the Scottish Provident Group in the same way as that proposed ultimately by the Scottish Mutual Group, then it would appear to be evident that such changes would not have been regarded as amounting to redundancy, any more than any of his earlier changes had been. The belief which the pursuer held that he had become redundant appears to have been prompted essentially because his employers changed, rather than as a consequence that the nature of his job was about to diminish or cease.

[27] He may also have been influenced by Mr Campbell's statement at the meeting of 31 August that he considered that the pursuer's job was finished. In the context of the whole of the evidence I am satisfied that what Mr Campbell meant by that was that certain conditions of the pursuer's employment, and in particular his control over sales consultants and training budgets, would no longer apply. This in my view does not disturb the conclusion that it was the defenders' intention, following the merger, that the pursuer and his colleagues would still be handling the same accounts as before, albeit under different working conditions.

[28] So it is a consequence of the statutory definition of redundancy cited above that alterations imposed by an employer to an employee's working conditions, even to a significant extent, does not provide the employee with a case that he is in effect dismissed for redundancy. The only test in this respect is whether the dismissal of the employee is wholly or mainly attributable to the fact that requirements of the business for the purposes of which the employee was employed to carry out work of a particular kind has ceased or diminished or is expected to cease or diminish. There is now a clear and settled line of authority to this effect culminating in the passage cited earlier from Lord Clyde's speech in Murray v Foyle Meats Ltd. In Chapman v Goonvean and Rostowrack China Clay Co Ltd [1973] 1 WLR 678, Buckley, LJ in dealing with the question of redundancy under earlier legislation, which was for present purposes similar to what is currently in force, said at page 686B:

"There seems to me however, to be nothing in the language of the section to suggest that the employer should be treated as bound or likely to carry on his business in all, or indeed in any, respects in precisely the way in which he was carrying it on, at the time when the facts have to be considered."

In Johnson v Nottinghamshire Combined Police Authority [1974], 1 WLR 358, in dealing with the same earlier legislation, Lord Denning MR said (at page 363B):

"..... an employer is entitled to reorganise his business so as to improve its efficiency and in so doing, to propose to his staff a change in the terms and conditions of their employment: and to dispense with their services if they do not agree. Such a change does not automatically give the staff the right to redundancy payments. It only does so if the change in terms and conditions is due to a redundancy situation."

The same point is made succinctly by Judge Peter Clark in Safeway Stores plc v Burrell [1997] ICR 523 at 539D....

"If the requirement for employees to do work of a particular kind remains the same, there can be no dismissal by reason of redundancy notwithstanding any unilateral variation to their contracts of employment...."

As defenders' counsel submitted, it is clear that material and unilateral change by an employer to an employee's terms and conditions of employment even to the extent that the employee is entitled to regard himself as constructively dismissed from his former employment does not mean that the dismissal is by reason of redundancy. That can only be the case where the dismissal is due to the economic state of affairs referred to in the statute. In the present case the purposes for which the pursuer was employed were not going to cease or diminish; there was only to be changes to the terms and conditions which would apply to the way in which he carried out those purposes.

[29] The next proposition discussed by pursuer's counsel was that the conduct of the defenders throughout the negotiations was such that it destroyed the trust and confidence that should exist between employer and employee. Clearly certain kinds of behaviour on the part of an employer can lead to a situation where an employee is constructively dismissed. However, it would be quite another proposition to suggest that such behaviour, which directly had a bearing on the relationship between employer and employee, could of itself lead to the employee's position becoming redundant. My understanding is that pursuer's counsel also used this part of his argument to refute any suggestion by the defenders that the pursuer had behaved unreasonably and so was not entitled to claim redundancy. If that is so, then this part of the case turned out to be largely irrelevant. It is quite true that negotiations between the defenders on the one hand and the pursuer and his colleagues on the other were marked with confusion, misunderstanding and a remarkable lack of clarity on both sides about the main issues involved in taking over the national accounts managers' jobs into the defenders' business. There also appears to have been a great deal of posturing, intransigence and unwillingness to co-operate or to take the slightest interest in opposing points of view, particularly on the part of the defenders. But while all of this may have contributed to the pursuer's decision to leave the defenders' employment, it had no effect whatsoever on the essential nature of the job which national accounts managers were to be required to do under the new arrangements. The various conversations, meetings and correspondence which were discussed at length in the evidence were only in the end of the day about the way in which the pursuer's job was to be done in the future.

[30] Finally, the pursuer claimed that he should have been treated in the same way as the regional sales managers formerly employed by the Scottish Provident Group who were all offered redundancy packages at the time of the merger. This proposition depends upon the notion that employees of equivalent status should always enjoy parity of treatment from employers. The jurisprudence that might support this proposition was not explored by the pursuer's counsel. But any such principle must inevitably depend upon it being demonstrated that the employee with whom the pursuer seeks to be compared must be truly in an equivalent position to himself. This was simply not established on the evidence in this case. The regional sales managers were at a different level in the hierarchy of the company from the pursuer and his colleagues, and did a job very different to that of the national accounts managers. Indeed, much of the pursuer's case was directed at confirming how unique his particular position was, and how significant would be any alteration to the precise job description which he enjoyed. More importantly, however, the regional sales managers and their exact equivalents in the Scottish Mutual Group numbered too many for the number of positions which the defenders proposed should be taken forward under the new conditions. As a result, while all of the regional sales managers had the opportunity of applying for the smaller number of posts, clearly a number of them would become redundant. On the other hand, the positions formerly occupied by the national accounts managers were all available to be filled, and no selection process was required. This was not in any way disputed by the pursuer. All of the national accounts managers therefore would have become employed under the new arrangements should that have been their choice. In these circumstances, therefore, it is simply impossible to make any realistic comparison between the position of the national accounts managers and that of the regional sales managers.

[31] I conclude that the pursuer has wholly failed to make out any claim for redundancy. I therefore sustain the first, second and third pleas in law for the defenders and refuse the pursuer's pleas in law. Had I found otherwise, it appears to be agreed that the sum which would represent the correct payment under the Scottish Provident Group's enhanced redundancy provisions was г82,942. The method by which this sum was worked out I need not relate as the global figure was not disputed. Interest would have run at the standard rate from the date of citation. I reserve the question of expenses.