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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Tracy and Others v. Crosville Wales Ltd [1997] UKHL 42; [1997] 4 All ER 449; [1997] 3 WLR 800 (16th October, 1997)
URL: http://www.bailii.org/uk/cases/UKHL/1997/42.html
Cite as: [1997] ICR 862, [1997] UKHL 42, [1997] 4 All ER 449, [1997] 3 WLR 800, [1998] AC 167, [1997] IRLR 691

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Tracy and Others v. Crosville Wales Ltd [1997] UKHL 42; [1997] 4 All ER 449; [1997] 3 WLR 800 (16th October, 1997)

HOUSE OF LORDS

  Lord Goff of Chieveley   Lord Mackay of Clashfern   Lord Lloyd of Berwick
  Lord Nolan   Lord Clyde

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE

TRACY AND OTHERS
(RESPONDENTS)

v.

CROSVILLE WALES LTD.

ON 16 OCTOBER 1997



LORD GOFF OF CHIEVELEY


My Lords,

      I have had the advantage of reading a draft of the speech of my noble and learned friend, Lord Nolan. For the reasons he has given, I, too, would dismiss this appeal.



LORD MACKAY OF CLASHFERN


My Lords,

      I have had the advantage of reading a draft of the speech of my noble and learned friend, Lord Nolan. For the reasons he has given, I, too, would dismiss this appeal.



LORD LLOYD OF BERWICK


My Lords,

      I have had the advantage of reading a draft of the speech of my noble and learned friend, Lord Nolan. For the reasons he has given, I, too, would dismiss this appeal.



LORD NOLAN


My Lords,

      This appeal raises the difficult question of the relationship between the provisions of the Employment Protection (Consolidation) Act 1978 concerning the refusal of an employer to re-engage striking employees who have been dismissed, on the one hand, and the provisions under which the compensation payable to unfairly dismissed employees may be reduced by reason of their contributory fault on the other hand. The question is one to which different answers have been given by the Employment Appeal Tribunal in earlier cases. There can, however, be no dispute about the correctness of the view expressed by Mummery J., giving the judgment of the Employment Appeal Tribunal in the present case, when he said: "The points canvassed in this appeal impinge on a socially sensitive, politically controversial and legally uncertain area of industrial relations."

      Nor, since the decision of the industrial tribunal, has there been any dispute about the matters of fact which are relevant for the purposes of the appeal. They are admirably summarised in the judgment of Mummery J., and I shall follow the example of the Court of Appeal [1996] I.C.R. 237 in repeating this part of his judgment almost verbatim.

      Crosville Wales Ltd., the appellant, employed in its business 119 bus drivers, all members of the Transport & General Workers' Union. In June 1990 a wage review was due. In September 1990 an increase was agreed for the engineering staff, but not for the drivers. On 3 October 1990 the union decided to hold a secret ballot. The ballot held on 8 October 1990 resulted in a majority decision in favour of industrial action short of a strike or strike action.

      A union meeting was held on Monday, 23 October. It was decided to operate a ban on overtime working and working on rest days from midnight on Saturday, 27 October. This would have the effect of destroying the Sunday bus routes which were totally reliant on voluntary work from overtime and rest days.

      The Divisional Manager, Mr. Ellis-Jones, wrote a letter to all employees on 23 October expressing regret at the decision to implement an overtime ban from Saturday in support of the pay claims. He pointed out that the union representatives were aware of the company's grave financial position and that the company had made the best offer possible. He also stated that the proposed action was in breach of the agreed procedure and was taken before proper negotiations had been concluded. He added that he was particularly concerned about contract work, especially Sundays which, if disrupted, would be reallocated by the county council to the company's competitors. That would result in a loss of jobs at Wrexham, a weaker financial position at the depot and less money for wages. It was conceded by Mr. O'Leary, the union's full-time district officer, that the union had not followed the agreed procedure for the avoidance of disputes contained in Appendix E to the Drivers' Instruction Book. In the event of failure to come to an agreement at depot level, the agreed procedure provided for a meeting between the local representatives, the depot official and local union officer and, if there was failure at that level, provision was made for a meeting between a board member, the full time trade union official and the elected depot representative.

      On 25 October there was a joint meeting at Flint of staff and management attended by Mr. O'Leary and other representatives of the employees with representatives of the employers. No agreement was reached. On 27 October the ban on overtime and rest day working began, as threatened. The depot superintendent at Wrexham, Mr. Poole, posted a notice in the garage announcing that an "open forum" had been arranged in the depot canteen for Tuesday, 30 October.

      The purpose of the forum was to make sure that everyone was aware of the seriousness of the situation and the possible consequences of continuing the industrial action. During the course of 30 October various events occurred before the meeting. Mr. Wooley, the union's branch secretary, and others went to see Mr. Poole and asked him if he would take down the compulsory Sunday rota which he had issued following the meeting held on 25 October. Mr. Poole refused. Later in the day Mr. Wooley was informed that he, along with others who had attended the earlier meeting with Mr. Poole, were suspended without pay. When the meeting took place in the canteen about 80 per cent. of the drivers were present and there was a mass walk out. On the following day there was a meeting, which lasted only three or four minutes, at which the union representatives asked for a written apology and a withdrawal of the suspensions.

      On 1 November Mr. Poole wrote to all employees advising them of the position relating to their decision not to work in accordance with their contracts of employment, and pointing out that each individual employee was in breach of contract and liable to dismissal. He contended that the ballot had not been correctly organised and was invalid and that, in view of the dire financial position of the depot, the company had no option but to require them to return to work by 3 November for normal duty or they would be deemed to have terminated their employment with the company.

      The men did not return to work. On 5 November the drivers were dismissed by letter from Mr. Poole. On 13 and 15 November there were further meetings at which the union representatives were told that the effects of the dispute meant that there was no question of taking all the drivers back. The best estimate was that 50/60 would now be required. The company rejected the union's proposal that all the drivers should be taken back and that a redundancy exercise should be carried out. The company then carried out a recruitment exercise for replacement staff by notices at the Wrexham depot, press and local radio announcements and advice to local jobcentres. All the applications were considered whether or not those applying had been involved in the strike action and had been dismissed. Every new employee was offered new terms and conditions of employment in line with the company's final pay offer to those employees who had been dismissed because of industrial action. All the strikers knew that the company was recruiting. They all had an opportunity of obtaining an application form, being interviewed and being considered for re-employment but offers of re-engagement were not made to all of the employees who took part in the industrial action. The final figures were that 25 of those who had been dismissed applied. Those were all offered jobs, but only 22 of them took up the offers.

      The strike effectively ended on 23 February 1991 when the Wrexham depot was closed. The drivers at Wrexham were relocated along with the routes at other depots. The company continued to make losses and the Wrexham depot was eventually sold in July 1991.

      In the meantime, complaints of unfair dismissal had been made by 73 of the drivers. A preliminary hearing was held on 28 and 29 August 1991 by an industrial tribunal under the chairmanship of Mr. Leo Blair in order to determine whether the tribunal had jurisdiction to hear the complaints.

      This procedure was necessary because of the terms of section 62 of the Employment Protection (Consolidation) Act 1978 as amended by the Employment Act 1982. These prohibitions have now been re-enacted in section 238 of the Trade Union and Labour Relations (Consolidation) Act 1992, but I shall refer to the Act of 1978 as amended because this was the statute in force at the time when the events which have given rise to the present case took place. Section 62 provides:

    "(1) The provisions of this section shall have effect in relation to an employee (the 'complainant') who claims that he has been unfairly dismissed by his employer where at the date of dismissal -

    (a) the employer was conducting or instituting a lock out, or

    (b) the complainant was taking part in a strike or other industrial action.

    "(2) In such a case an industrial tribunal shall not determine whether the dismissal was fair or unfair unless it is shown -

    (a) that one or more relevant employees of the same employer have not been dismissed, or

    (b) that any such employee has, before the expiry of the period of three months beginning with that employee's date of dismissal, been offered re-engagement and that the complainant has not been offered re-engagement.

    "(3) Where it is shown that the condition referred to in paragraph (b) of subsection (2) is fulfilled, the prohibitions of sections 57 to 60 shall have effect as if in those sections for any reference to the reason or principal reason for which the complainant was dismissed they were substituted a reference to the reason or principal reason of which he has not been offered re-engagement.

    "(4) In this section . . .

    (b) "relevant employees" means - . . .

     (ii) in relation to a strike or other industrial action, those employees at the establishment who were taking part in the action at the complainant's date of dismissal;

    'establishment' in sub-paragraph (ii), meaning that establishment of the employer at or from which the complainant works; and

    (c) any reference to an offer of re-engagement is a reference to an offer (made either by the original employer or by a successor of that employer or an associated employer) to re-engage an employee, either in the job which he held immediately before the date of dismissal or in a different job which would be reasonably suitable in his case."

      The preliminary hearing of the industrial tribunal on 28 and 29 August 1991 was concerned, as I have said, with the question whether the tribunal had jurisdiction under section 62(2). The tribunal held that it did have jurisdiction, firstly because they found it difficult to accept that announcements on the radio, and advertisements in newspapers and Job Centres, which were open to all and not solely to the ex-employees of the respondent company, were offers of re-engagement which complied with subsection (4)(c) of section 62. Secondly, and in any event, the tribunal took the view that section 62(4)(c) was not satisfied because the conditions attached to the re-engagement would be inconsistent with it either being the same job as before, or being a reasonably suitable alternative.

      Crosville Wales appealed against this decision to the Employment Appeal Tribunal, under the chairmanship of Knox J. On 6 October 1992 the Employment Appeal Tribunal upheld the decision of the industrial tribunal on the first ground, that is on the ground that offers of re-engagement had not been made to the employees. The Employment Appeal Tribunal said:

    "What was in our view, on the facts found by the industrial tribunal, made available to the employees was the opportunity of having an offer made to them. . . . In a formal legal analysis what in our view happened when the press, radio and other general notices were issued, was that there was an offer to treat for re-engagement rather than an offer of re-engagement. . . ."

      The matter then returned to the industrial tribunal, this time under the chairmanship of Mr. D.P. Thompson, for a full four-day hearing which began on 19 April 1993. The purpose of this hearing was to give effect to the terms of section 62(3), that is to say to apply the provisions of sections 57 to 60 relating to unfair dismissals as if the references to the reason or principal reason for the dismissal were replaced by references to the reason or principal reason for which the employee had not been offered re-engagement. Before reciting these provisions as thus notionally amended I would refer to section 63. That section provides:

          "In determining, for the purposes of this Part any question as to the reason, or principal reason, for which an employee was dismissed or any question whether the reason or principal reason for which an employee was dismissed was a reason fulfilling the requirements of section 57(1)(b) or whether the employer acted reasonably in treating it as a sufficient reason for dismissing him, - (a) no account shall be taken of any pressure which, by calling, organising, procuring or financing a strike or other industrial action, or threatening to do so, was exercised on the employer to dismiss the employee, and (b) any such question shall be determined as if no such pressure had been exercised."

      Section 57 (as notionally reworded by section 62(3) in a case of discriminatory non-engagement and as amended by section 6 of the Employment Act 1980) reads:

          "(1) In determining for the purposes of this Part whether the dismissal of an employee was fair or unfair, it shall be for the employer to show - (a) what was the reason (or, if there was more than one, the principal reason) for [which the complainant was not offered re-engagement], and (b) that it was a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the [non-offer of re-engagement to the employee concerned].

          "(2) In subsection (1)(b) the reference to a reason falling within this subsection is a reference to a reason which - (a) related to the capability or qualifications of the employee for performing work of the kind of which he was employed by the employer to do, or (b) related to the conduct of the employee, or (c) was that the employee was redundant. . . .(3) Where the employee has fulfilled the requirements of subsection (1), then, subject to sections 58 to 62, the determination of the question of whether the dismissal was fair or unfair, having regard to the reason shown by the employer [for not offering re-engagement to the complainant], shall depend on whether, in the circumstances (including the size and administrative resources of the employer's undertaking), the employer acted reasonably or unreasonably in treating it as a sufficient reason for [not offering the complainant re-engagement]; and that question shall be determined in accordance with equity and the substantial merits of the case."

      Having heard the evidence and considered the matter in the light of these criteria the industrial tribunal gave judgment on 7 June 1993 upholding the employees' complaints in principle and concluding that the failure of Crosville Wales to re-engage them was unfair.

In paragraph 77 of their judgment the industrial tribunal said:

    "The first question that we must ask is: 'What was the reason (or if there was more than one, the principal reason) for which the complainants were not offered re-engagement?' Frankly, that question has been very easy for the tribunal to answer. The reasons were given very clearly and openly by Mr. Rimmington and Mr. Poole when they gave their evidence. They said that the reason for their failure to offer re-engagement was that they thought that advertising through the media and the Job Centre was sufficient to constitute an offer for compliance with the legislation, and Mr. Poole was told by Mr. Rimmington not to have any contact with the men direct for fear of falling foul of the selective re-engagement provisions. Those were the sole and only reasons for the respondents' failure to offer re-engagement to the complainants."

      The industrial tribunal went on to find that these reasons did not comply with section 57(1)(b): they did not fall under any of this specific heads set out in section 57(2), nor did they constitute "some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held." It was therefore unnecessary for the appeal tribunal to consider the meaning of the word "conduct" in section 57(2)(b) and it was also unnecessary for the tribunal to look at the merits of the industrial dispute under the provisions of section 57(3). For unless the employer had complied with the requirements of section 57(1)(b) which Crosville Wales had not, the provisions of section 57(3) relating to the equity and the substantial merits of the case do not come into play.

      There was no appeal against that part of the decision of the industrial tribunal. The concluding remarks of the tribunal on the subject of the conduct of the employee to which section 57(2)(b) refers and on the merits of the industrial dispute in relation to section 57(3) are, however, relevant to the issues which have been the subject of appeals to the Employment Appeal Tribunal, the Court of Appeal, and now your Lordships' House.

      These issues arise from the contention of Crosville Wales that the compensation to which the employees became entitled in consequence of the decision of the industrial tribunal fell to be reduced on the ground that the conduct of the employees had contributed to their dismissal. By virtue of section 72 of the Act this compensation consisted of a basic award to be calculated in accordance of section 73, and a compensatory award to be calculated in accordance with section 74. Under section 73(3) the basic award is related as a general rule to length of service, though the section also contains a large number of specific provisions governing particular cases such as redundancy. Subject again to specific provision for particular cases, the contributory award under section 74(1) is:

    "such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

      Both sections provide for the compensation to be reduced in the event of a finding of contributory fault on the part of the employee. Section 73(7B), as inserted by section 9 of the Employment Act 1980 and amended by section 4(2) of the Act of 1982 provides:

          "Where the tribunal considers that any conduct of the complainant before the dismissal . . . was such that it would be just and equitable to reduce or further reduce the amount of the basic award to any extent, the tribunal shall reduce or further reduce that amount accordingly."

Section 74(6) provides:

          "Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant it shall reduce the amount of compensatory award by such proportion as it considers just and equitable having regard to that finding."

Section 74, but not section 73, is qualified by the provisions of section 74(5) which echo those of section 63, and which reads:

          "In determining, for the purposes of subsection (1), how far any loss sustained by the complainant was attributable to action taken by the employer no account shall be taken of any pressure which, by calling, organising, procuring or financing a strike or other industrial action, or threatening to do so, was exercised on the employer to dismiss the employee, and that question shall be determined as if no such pressure had been exercised."

      My Lords, I have set out the main relevant statutory provisions in this laborious and painstaking manner because of their bearing upon the principal question raised by this appeal, which may be stated in the following terms:

    "When an industrial tribunal has jurisdiction to hear unfair dismissal claims by employees who have been dismissed for taking part in a strike or other industrial action, because some but not all have been offered re-engagement, can participation in the strike or other action in itself amount to 'conduct' or'action' within section 73(7B) and section 74(6) of the Act of 1978 respectively for the purpose of reducing any compensation which the industrial tribunal might award for unfair dismissal?"

      At the full hearing before the industrial tribunal in April 1993 Mr. McMullen had argued that the answer to the question was plainly "Yes." Participation in the industrial action plainly constituted both conduct and action on the part of the participators. At the same hearing he took his initial stand at an earlier point in the argument, contending on substantially the same grounds that the participation of the complainants in the industrial dispute was "conduct" within the meaning of section 57(2)(b) and in addition was relevant to the determination under section 57(3) of the question whether the employer had acted reasonably or unreasonably. As I have mentioned, however, this contention did not fall to be considered on its merits because of the industrial tribunal's decision that the reason for the complainants' dismissal was not a reason relating to their conduct, was not otherwise within section 57(1)(b) and therefore obviated the need for any inquiry under section 57(3) into the reasonableness of the employer's behaviour. Irrespective of the provisions of section 57(3), the dismissal of the complainants fell to be regarded as unfair because the employer's re-engagement of some but not all of them failed to satisfy the criteria laid down in section 57 and section 62(3). The entitlement of the complainants to compensation was thus established, and there remained the question of contribution. As the industrial tribunal observed in paragraph 82 of their decision "this is where the matter becomes somewhat complicated."

      The first complication is that although the complainants' claims for compensation only came into existence because of the selective re-engagement carried out by Crosville Wales, this factor must be ignored in determining whether the compensation should be reduced under section 73(7B) or section 74(6). This was decided by the Employment Appeal Tribunal under the chairmanship of Browne-Wilkinson J. in Courtaulds Northern Spinning Ltd. v. Moosa [1984] I.C.R. 218. That decision was followed by the Employment Appeal Tribunal under the chairmanship of Wood J. In TNT Express (U.K.) Ltd. v. Downes [1994] I.C.R.1, and its correctness has not been challenged before your Lordships. The reason for the decision appears from the following passage in the judgment of Browne-Wilkinson J. in the Courtaulds case, at p. 223. After setting out the terms of section 74(6), and saying that exactly the same considerations applied to section 73(7B), he continued:

          "Mr. Sedley, for the applicant, submits that, on the true construction of the Act, where section 62(3) requires the industrial tribunal to have regard not to the reason for dismissal but to the reason for failure to re-engage, the contributory fault to be considered under section 74(6) must be conduct contributing to the failure to re-engage not conduct contributing to the original dismissal. Although we can appreciate that there would be much sense if Parliament had so provided, we cannot construe the words of the Act so as to reach that result. Section 62(3) only makes limited consequential amendments where there has been selective re-engagement. It makes no express amendment to the provisions of section 73 or section 74. Nor does it even amend the meaning of the word 'dismissal' itself for the purposes of sections 57 to 60: the only amendment relates to the reasons for dismissal.

          "In our judgment, when there is a case of selective re-engagement, the employee's complaint remains a complaint that he was unfairly dismissed: his complaint is not that he was unfairly refused re-engagement. The statutory right confirmed by section 54 is to complain of a dismissal as defined in section 55: these sections are not amended by section 62(3). The industrial tribunal's jurisdiction to entertain any claim is conferred by section 67(1) which refers only to a complaint of unfair dismissal. The statutory power to award compensation is contained in section 68(2) and depends upon a finding that a complaint under section 67 is justified, i.e. that the complainant has been unfairly dismissed. It therefore seems to us that, whether intentionally or not, in cases of selective re-engagement Parliament has continued to make the basis of the complaint the dismissal and not the failure to re-engage. Accordingly as a matter of construction we can see no reason to give section 74(6) anything but its ordinary meaning, i.e. that even in a case of selective re-engagement the relevant question is whether the employee has contributed to his dismissal: it is neither necessary nor proper to consider whether he has contributed to his failure to be re-engaged."

      My Lords, I find this reasoning compelling, and would adopt it even if it had not been accepted by both parties and by the Court of Appeal in the present case. At the same time, I have much sympathy with the industrial tribunal who said, in paragraph 85 of their judgment:

    "that we are in the somewhat ridiculous situation that we have to decide the primary cases on the basis of the respondent's failure to offer re-engagement, but we must decide the other issues, such as contributory fault, in relation to the act of dismissal and not to the failure to re-engage."

As it happens, the absurdity of the situation gave rise to no practical difficulties in the present case, because the employer's reasons for the selective re-engagement bore no relation to the conduct of the employees. But it is not difficult to imagine cases in which the two would be closely linked. In the search which your Lordships must make to discover the purpose which Parliament intend to serve by the enactment of section 73(7B) and section 74(6) it is discouraging to have to start from such an unsatisfactory premise.

      The second complication is that the question before your Lordships has been answered in opposite senses by two separate divisions of the Employment Appeal Tribunal, each under the chairmanship of a very experienced President, in the Courtaulds [1984] I.C.R. 218 and TNT [1994] I.C.R. 1 cases respectively. The relevant passages in the judgments in both cases are fully set out in the judgment of the Court of Appeal, and it is unnecessary for me to repeat them both in full. I must, however, refer to the passages revealing the point at which they part company, namely, the significance of section 62 of the Act. In the Courtaulds case Browne Wilkinson J. said, at pp. 224-225:

 

    "It has always been accepted that the general intention of Parliament lying behind section 62 of the Act is to prevent industrial tribunals from going into the merits or demerits of collective industrial disputes. Both counsel accept this to be the position. The detailed way in which Parliament sought to achieve this result is not entirely clear to us: however the general principle is well established. Strikes and other industrial action normally (although not invariably) involve the employees who are taking part in it in breaches of their contracts of employment. For example, the ordinary strike involves a breach of contract. So, in the present case, the industrial action taken by the applicant and his fellow employees involved a breach of their contracts although the dispute between the employees and the employers was not about the term which they breached. If an industrial tribunal is entitled under section 74(6) to reduce the compensation because of industrial action which constitutes a breach of contract, it will have to enter precisely the arena from which Parliament, in general, decide to exclude it.

          "In Nelson v. British Broadcasting Corporation (No.2.) [1980] I.C.R. 110, the Court of Appeal laid down that in order to justify a reduction in compensation under section 74(6) three things have to be established: first, blameworthy conduct by the employee; secondly, that such conduct contributed to or caused the dismissal; thirdly, that it is just and equitable to reduce the compensation by a given amount. It is possible to suppose that Parliament might have regarded industrial action involving a breach of contract as blameworthy conduct, although we venture to think this very improbable. But we find it impossible to accept that Parliament, in conferring the right to reduce compensation, can ever have intended an industrial tribunal to form a view as to the merits or demerits of any particular industrial action. Without forming such a view it would be impossible for an industrial tribunal to determine the proportion, if any, by which it was just and equitable to reduce compensation.

          "Industrial disputes are often very complex, having a long history and involving many contributory factors. In no area of English law of which we are aware are courts ever entrusted with the determination and allocation of blame in relation to industrial disputes. Section 62 of the Act of 1978 excludes industrial tribunals from considering whether an employer acted reasonably in dismissing an employee engaged in industrial action. It would be strange indeed if Parliament had intended that the industrial tribunal should consider what is effectively the same point when coming to consider the blameworthiness of the employee's conduct. We therefore reach the conclusion that it is not possible for an industrial tribunal to hold under section 74(6) that the industrial action in which the employee was taking part (whether or not it was in breach of contract) in itself justifies a reduction in compensation, since an industrial tribunal is unable to determine whether or not, and to what extent, it is just and equitable to make such reduction.

          "This does not exclude the possibility that there may be conduct other than the industrial action itself which could justify a reduction under section 74(6). Say, for example, that an employee who was on strike had in fact been dismissed for reasons other than that he was taking part in the strike. If the industrial tribunal came to the conclusion that such dismissal was even so unfair, it might well take the view that the employee's conduct which had caused his dismissal (as opposed to the industrial action itself) merited a reduction under section 74(6). For these reasons the industrial tribunal were in our judgment right in law in not making any reduction in compensation since they could not properly hold that it was just and equitable so to do."

      In the TNT case [1994] I.C.R. 1, on the other hand, Wood J. attached no such significance to the enactment of section 62. He said, at pp. 7-8:

          "Put very shortly, prior to the Employment Protection Act 1975, an employee who was dismissed on the grounds of industrial action was not to be considered unfairly dismissed unless the discriminatory factors were established. By the Act of 1975 the position was radically changed and an industrial tribunal was barred from considering whether a dismissal was fair or unfair unless a discriminatory factor was established. In Faust's case Stephenson L.J. therefore concluded, at p. 299: 'So industrial tribunals, presented with a complaint of unfair dismissal by an employee alleged to have taken part in industrial action, had from 1971 to 1974 to consider that action and the provisions against victimisation in the course of determining whether he had proved his complaint, but had from 1975 to 1978 and since to consider them in order to determine whether he could even try to prove it.'

    "Purchas L.J. in his judgment said, at p. 302:

    'Mr. Carr submitted . . . that . . . therefore the words of section 62 of the Act of 1978 could be given their plain and ordinary meaning, namely, once it was established that the employee was, at the date of his dismissal, engaged in a strike or other industrial action, the industrial tribunal could only enter upon a consideration of the merits of the case if it could be shown that the employee had been subjected to discriminatory treatment in the matter of dismissal or re-engagement. I agree with this submission.'

    "Thus, we have clear guidance on the purpose of section 62(1) and (2) of the Act of 1978."

Later Wood J. added, at pp. 8-9:

    "in our judgment, the Court of Appeal has shown the purpose behind section 62 and its effect. It goes to jurisdiction. The words used are 'shall not determine.' If through voluntary or involuntary 'discrimination,' which, as in the present case, could be for humanitarian or sound reasons in individual cases, an industrial tribunal is given jurisdiction, then it must carry out its statutory function and seek to do that which is fair, just and reasonable between the parties. All these surrounding circumstances will be examined as in any other case. The concession made in Courtaulds Northern Spinning Ltd. v. Moosa [1984] I.C.R. 218, the premise upon which the decision rests, is in our judgment unsound."

The full hearing before the industrial tribunal in the present case took place after the decision in the Courtaulds case but before the decision in the TNT case. The tribunal accordingly applied the former decision and held that it was not entitled to regard the participation of the complainants in the industrial action as a ground for reducing their compensation. The tribunal added, however, in paragraph 89 of its decision, that if it had been entitled to reduce the compensation on this ground it would have done so by 50 per cent., since the complainants and Crosville Wales were equally to blame.

By the time that the matter came before the Employment Appeal Tribunal the TNT decision had been given. The Employment Appeal Tribunal felt bound to follow this, the more recent decision in preference to the earlier Courtaulds decision. It therefore allowed the appeal of Crosville Wales, and also allowed a cross appeal by the complainants against the 50 per cent. reduction, ordering that this latter issue should be remitted to the industrial tribunal for consideration.

When the matter came before the Court of Appeal [1996] I.C.R. 237, Waite L.J. (himself a former President of the Employment Appeal Tribunal), in a judgment with which Otton and Beldam L.JJ. agreed, approached the matter in this way, at pp. 254-255:

          "The best starting point, as with all issues of statutory construction, must be the presumed intention of the legislature. Complex though the legislation may be, the intention is clear. It is to discourage discriminatory re-employment in the immediate aftermath of industrial action. The essence of discrimination, in such a context, is that there should be a picking and choosing from people who have been engaged in the same industrial action. A remedy against discrimination of that kind, and a power to determine issues of contributory fault on the basis of justice and equity, have both been features of the unfair dismissal legislation from its earliest origins. The intention must had been to enable the victims of discrimination to ask the classic question: 'Why pick on me?' and to have it answered in a way which will result in an employer who can supply no answer, or no entirely adequate answer, in having to pay such compensation to the victim as justice and equity may require.

          "In a case where A, B, C and D have all been dismissed while participating in the same strike or industrial action, and where A and B alone have been offered re-engagement, the industrial tribunal has a threefold duty. The first is to determine its own jurisdiction: that will involve scrutinising the relevant collective action for the purpose of determining whether it amounts to a strike or other industrial action and inquiring whether there have been any offers of re-engagement to the complainants and if so whether they pass muster under the Act of 1978 for identity or comparability. The second (assuming jurisdiction to be established) is to decide whether C and D have been unfairly dismissed because there was no qualifying reason, or no sufficient justifying reason, for the discriminatory failure to re-engage. The third (assuming that also to be established) is to determine whether C and D should be regarded as having contributed to their dismissal and if so what reduction (if any) it would be just and equitable to make in the amount of their compensation.

          "When the tribunal is exercising that third duty, it seems to me to be quite impossible that Parliament could ever have contemplated that it would be just and equitable to penalise C and D, the victims of the discrimination, by way of contributory fault, solely for conduct in which they had participated in common with A and B, the beneficiaries of the discrimination. What Parliament must be deemed to have contemplated is that there would be instances in which C and D had been engaged at the relevant time in activities of their own, which although connected with the common action had an identifiably distinctive impact upon the decision to dismiss. In such a case it would not only be appropriate but essential for the industrial tribunal to examine such activities and inquire whether they should be treated as causative or contributory to the dismissal and if so whether it would be just and equitable to take them into account as justifying an abatement of the compensation award.

          "The question, therefore, for the industrial tribunal at the stage of considering contributory fault is: 'Have these applicants been responsible, in addition to mere participation in the relevant industrial action, for any conduct of their own contributing to the dismissal which was sufficiently blameworthy to make it just and equitable to reduce their compensation?'"

In a later passage Waite L.J. added, at pp. 255-257:

    "When tribunals are faced with a dismissal that has been found to be unfair in circumstances of discriminatory failure to re-engage, they will be excluded (on grounds both of equity and of policy) from considering contributory fault if the only conduct relied on is the collective conduct represented by the industrial action in the course of which the dismissal occurred. That is not to say, however, that discriminatory failure to re-engage represents an area of the law from which contributory fault is wholly excluded. It is available to answer the demands of equity and justice in cases where the complainant can be shown to have been individually responsible for activities which are found to have been causative of, or contributory to, his dismissal. When that result is applied to the present case, the consequences in my judgment are as follows.

          "(1) Sections 73(7B) and 74(6) of the Act of 1978 fall to be applied as enacted without any implication that would apply them to failure to re-engage--rather than (or in addition to) dismissal. Sense can be made of the whole legislative scheme without the need to import words that Parliament has not itself used. The decisions in this respect of the appeal tribunal in both Courtaulds Northern Spinning Ltd. v. Moosa [1984] I.C.R. 218 and TNT Express (U.K.) Ltd. v. Downes [1994] I.C.R. were correct.

          "(2) The decision in Courtaulds was unquestionably correct upon its facts, because there was in that case no finding that the applicant has been responsible for any activities of his own which might have been adjudged blameworthy.

          "(3) Although that is the primary ground on which (by reason of its consistency with the scheme of the legislation as I have sought to analyse it) I would prefer to hold that Courtaulds was correctly decided, that decision was also in my judgment correct in its own chosen ratio, at pp. 224-225, namely that: 'it is not possible for an industrial tribunal to hold under section 74(6) that the industrial action in which the employee was taking part (whether or not it was in breach of contract) in itself justifies a reduction in compensation, since an industrial tribunal is unable to determine whether or not, and to what extent, it is just and equitable to make such a reduction.' (My emphasis.)

    "I would however add to that the qualification that in cases where the complainants have been shown to have been responsible for some additional conduct of their own, then the fact that such conduct occurred during, and as part of, the industrial action does not preclude the industrial tribunal from examining it separately and considering whether it contributed to the complainants' dismissal. If the judgment in Courtaulds intended, at p. 225B, to state that such instances should be restricted to cases where the complainant although dismissed while on strike had been in fact dismissed for reasons other than strike participation, I would myself regard that is too restrictive. There must, as I have already indicated, be cases in which it would be entirely reasonable and proper for the tribunal to find that the complainant, regardless of the reason for his dismissal, had by some conduct of his own additional to or separate from the mere act of participation in the action contributed to his dismissal.

          "(4) The decision in TNT Express (U.K.) Ltd v. Downes [1994] I.C.R I was incorrect upon its facts, for the same reason that Courtaulds Northern Spinning Ltd v. Moosa [1984] I.C.R 218 was correct; namely because there were no findings in that case either of any conduct by the complainants which distinguished them from their colleagues. The criticisms of the Courtaulds decision made in TNT were unjustified (subject only to the qualification that I have mentioned) and the purported grounds for distinguishing it were unsound. In so far as TNT held that an industrial tribunal is entitled to go beyond the value judgments it is permitted to make when examining some particular conduct of the complainant additional to mere participation in the dispute itself, and to pass generalised judgments on the merits of the collective action when viewed as a whole, it was wrongly decided and should not be followed.

          "(5) The industrial tribunal in the present case was similarly right to leave contributory fault out of account, because there was no evidence (and no suggestion) that out of the total dismissed workforce the 73 applicants had been responsible for any independent conduct of their own which might qualify for separate consideration on grounds of justice or equity for the purposes of assessing contributory fault. Their paragraph 89 findings do not therefore arise at all for consideration, although I would add that, if they did, they would be open to justified criticism as being precisely the sort of generalised judgment on the merits or demerits of collective action which offends the policy to which the appeal tribunal in Courtaulds [1984] I.C.R 218 rightly drew attention. In any future case in which the separate conduct of individual complainants fell to be considered for possible contributory fault, I would not expect findings of that general nature to be regarded by the tribunal as either appropriate or relevant."

      Both in his oral submissions and in the written submissions prepared by him and his junior Mr. McMullen has deployed a wide and scholarly range of arguments against these conclusions. If I do not deal with all of them it is not for lack of appreciation but because I cannot, for my part, find in this fragmented and constantly amended legislation a sufficient degree of consistency and logic to merit such a thorough analysis.

      Mr. McMullen's most telling argument, to my mind, was that as a matter of plain English the participation of the complainants in the industrial action involved both conduct and action on their part, and therefore brought them squarely within the terms of section 73(7B) and section 74(5). He reminded us of the emphasis placed by your Lordships House in Stock v. Frank Jones (Tipton) Ltd. [1978] 1 W.L.R. 231, a case decided on one of the forerunners to section 62, upon the general principle that where Parliament had expressed itself plainly the courts had no right to depart from the language used. He criticised the formulation by Waite L.J. of the crucial question as

    "Have these applicants been responsible, in addition to mere participation in the relevant industrial action, for any conduct of their own contributing to the dismissal which was sufficiently blameworthy to make it just and equitable to reduce their compensation?" (Emphasis added.)

for writing words into the statute which were not there, and which greatly restricted its effect.

      Looking more generally at the statutory context he submitted that there was nothing in the terms of section 62 to suggest that the courts were precluded from taking account of particular conduct merely because it consisted of participation in an industrial dispute. That section merely laid the ground for determining whether those dismissed for taking part in such a dispute were entitled to claim, by reason of selective re-employment on the part of the employer, that their dismissal was unfair. Once the jurisdictional position had thus been established, the contention of the employee must be considered by reference to all of the circumstances including, in appropriate cases, the conduct of the employee and the equity and substantial merits of the case, under section 57(2)(b) and (3). The provisions of section 63 expressly required the consideration of any pressure which might have been exercised on the employer to dismiss the employee, if only for the purpose of leaving it out of account. (The same consideration is, of course, required by section 74(5) in the context of possible reduction of the employee's compensatory award by reference to contributory fault). Thus, as Waite L.J. had accepted, at p. 253G-H, the legislature is not in the least squeamish about involving industrial tribunals in the consideration of disputed issues of collective action.

      Mr. McMullen acknowledged that attention must be focused upon the conduct of the individual employee in order to determine whether it was blameworthy to a degree which would reduce or eliminate his compensation (a point clearly made in Parker Foundry Ltd. v. Slack [1992] I.C.R. 302 by Woolf L.J., at p. 308A-B, and by Balcombe L.J., at p. 311), but submitted that there was no reason why a number of individuals should not be equally to blame for the same conduct. He referred your Lordships to a passage from the judgment of Lord Denning M.R. in Williams v. National Theatre Board Ltd. [1982] I.C.R. 715 in which, albeit obiter, he had referred to the striking employees collectively as "guilty of most serious misconduct."

      Mr. McMullen further submitted that the need to focus upon the conduct of the individual employee who is claiming compensation invalidated the comparison drawn by Waite L.J. between the treatment of those who had been re-employed and those who had not. Waite L.J's point had been, of course, that if A, B, C and D had all taken part in the industrial action, but A and B had been re-engaged while C and D had not, it could not have been the intention of Parliament to penalise C and D who had suffered from the discrimination, while the equally blameworthy A and B had not suffered. But this, submits Mr. McMullen, is no different in principle from the situation in the Parker Foundry case [1992] I.C.R. 302 where two employees had been fighting, where one had been dismissed by the management but the other merely suspended, and where it was held that the compensation claimed by the former could properly be reduced by reference to his conduct alone, irrespective of the degree of blameworthiness which should be attached to the other employee.

      My Lords, persuasively as this final submission was put, I cannot accept it. For one thing it oversimplifies the comparison between the present case and the Parker Foundry case. In the Parker Foundry case, for good reason or bad, the management had regarded the other employee as being less culpable than the complainant, but had nonetheless punished him, though to a lesser degree. The issue raised in the case was whether for the purpose of assessing the complainant's compensation claim, the relative merits or demerits of his conduct as compared with that of the other employee should be taken into account and the decision was that it should not. In the present case there is no question of any difference between the relative blameworthiness or non blameworthiness of the employees concerned, A and B on the one hand or C and D on the other. This case, unlike the Parker Foundry case, is concerned with collective activity for which all those involved are equally responsible and for which all were dismissed.

      Secondly, Mr. McMullen's argument carries him too far, because if attention is to be focused upon the behaviour of the individual employee alone, the focus must not only exclude the other employees, but also the employer. This was expressly recognised by May J. in Allders International Ltd. v. Parkins [1981] I.R.L.R. 68, a decision referred to with approval by Woolf L.J. in the Parker Foundry case, at p. 310. Taken as a whole, the Parker Foundry judgments appear to me to militate against the arguments of Crosville Wales rather than in their favour. For in the case of collective action by a number of employees against their employer it is surely impossible to judge the blameworthiness or otherwise of a particular employee's conduct without reference to the conduct of the other employees concerned, and to that of the employer.

      This does not diminish the force of Mr. McMullen's arguments based upon the plain meaning of the words "conduct" and "action" and the statutory context in which they appear. It may well have been the intention of Parliament throughout that industrial tribunals should not become involved in the merits or de-merits of collective industrial disputes but, as Browne-Wilkinson J. said in the Courtaulds case [1984] I.C.R. 218, 224, "The detailed way in which Parliament sought to achieve this result is not entirely clear." The immediate and apparent purpose of section 62 read by itself is simply to make it plain that an employer who conducts a lockout or who carries out a wholesale dismissal of striking employees is prima facie immune from claims for unfair dismissal. If the matter rested there, then the section would be strong evidence of a legislative intention to keep the merits of industrial disputes out of the courts. But the reintroduction of the concept of unfair dismissal by way of the provisions regulating selective re-employment inevitably involves the possibility of the tribunal having to consider the case of the individual employee in the context of the industrial action and of the employer's conduct in applying the provisions of section 57 as notionally reworded. The difficulty for Crosville Wales in the present case is that when one comes to the final stage of deciding whether the dismissed employees' compensation should be reduced one encounters the first of the complications which I have referred to above: the fairness or unfairness of the selective re-engagement must be ignored. It is at this point, to my mind, and on this fairly narrow ground that the argument for the employer fails, because of the sheer impossibility of the task of allocating the blame for the industrial action to any individual complainant, the more so since the collective blame for the industrial action is shared by those who were re-engaged. I respectfully agree with Waite L.J. that this is a consequence which Parliament can never have contemplated. In order to reach this conclusion it is not, in my judgment, necessary to add any words to those which already appear in the Act. The conclusion simply gives effect to the statutory requirement that any reduction in the compensation of an individual employee should be, and should only be, such as is "just and equitable."

      I would accept that a broader approach must be followed at the earlier stage when the tribunal is considering whether, in a case of selective re-engagement, the particular employee has been unfairly dismissed. At that stage, particularly if the employee's conduct comes into the reckoning under section 57(2)(b), it may well be essential to compare the treatment accorded to that employee with the treatment accorded to others, and to have regard to the employer's conduct and to the general merits of the case. But even here I would stop short of accepting that the consideration of the matter by the tribunal must necessarily extend to the collective merits or demerits of the industrial action. The point is not before us and so it would be wrong to attempt to decide it, but one cannot simply brush aside the preponderance of judicial opinion over the last twenty years which has been to the effect stated by Phillips J. in Gallagher v. Wragg [1977] I.C.R. 174, 178:

    "But, of course, the whole policy of the law as enshrined in the Act of 1974 and the later enactments is to withdraw the law from the field of industrial disputes. There is a kind of legal laissez-faire or neutrality as soon as an industrial dispute breaks out."

      If that is not the policy of the law it might be argued that Parliament should have taken, or should now take, an opportunity to correct it.

      Putting the matter more generally, I agree with the conclusions stated by Waite L.J. on the subject of contributory fault. I agree in particular with the qualification or interpretation which he places upon the Courtaulds judgment in the third of his conclusions. Individual blameworthy conduct additional to or separate from the mere act of participation in industrial action must in principle be capable of amounting to contributory fault.

      It follows that I would dismiss the appeal. I would do so, however, with little sense of satisfaction about the justice of the result, or the state of the law which has given rise to it. This was not, after all, a case of deliberate victimisation by the employers, but they are being required to pay just as much compensation as if it had been. I find it difficult to accept that a policy of laissez faire or neutrality must necessarily lead to such a result. This area of the law appears to me one which would benefit from the attention of the Law Commission.



LORD CLYDE


My Lords,

      I have had the advantage of reading a draft of the speech of my noble and learned friend, Lord Nolan. For the reasons he has given, I, too, would dismiss this appeal.




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