British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Radin Ltd v GMB & Ors [2004] EWCA Civ 180 (20 February 2004)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2004/180.html
Cite as: [2004] EWCA Civ 180, [2004] ICR 893, [2004] 2 All ER 279, [2004] IRLR 400
[New search] [Printable RTF version] [Buy ICLR report: [2004] ICR 893] [Buy ICLR report: [2005] ICR 435] [Buy ICLR report: [2007] ICR 226] [Help]
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT
APPEAL TRIBUNAL
Strand, London, WC2A 2LL |
||
B e f o r e :
LORD JUSTICE LAWS
and
LORD JUSTICE LONGMORE
____________________
| SUSIE RADIN LTD. |
Appellant |
|
| - and - |
||
| GMB AND OTHERS |
Respondents |
____________________
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr. Philip Mead (instructed by Messrs Thompsons of Newcastle-upon-Tyne) for the Respondents
____________________
Crown Copyright ©
- This appeal involves a challenge to the protective award, including in particular the length of the protected period, made by an Employment Tribunal ("ET") under s. 189 (2) of the Trade Union and Labour Relations (Consolidation) Act 1992 ("the 1992 Act") as amended by the Trade Union Reform and Employment Rights Act 1993 and the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 and 1999 respectively. The ET had found that the employer, which made more than 100 employees redundant on the closure of its English factory, had breached s. 188 of the 1992 Act by its failure to consult and the ET made a protective award of the maximum period permitted under the 1992 Act. The Employment Appeal Tribunal dismissed the appeal of the employer. This appeal, brought with the permission of this court, is the first occasion on which the principles on which a protective award falls to be made have been considered at the level of this court.
- The Appellant, Susie Radin Ltd. ("the Company"), designs and, until 14 July 2000, manufactured clothing at a factory in Crook, County Durham. 108 employees worked in the factory. There was a recognition agreement with the GMB although not all the employees were members of that union. Miss Woodall was the GMB officer responsible for the company's employees.
- The first indication of a possible closure of the factory came in a letter to Miss Woodall from a director of the Company, Mr. Grant, on 20 March 2000, in which he rejected a pay claim for April 2000 and said that keeping the factory open was far from guaranteed and was being continually reviewed. Mr. Grant and another director, Ms. Radin, had consulted the Company's solicitor, Mr. Shaw, who on 6 April 2000 sent letters to the GMB and to the employees not represented by the GMB notifying them of the impending redundancies, and saying:
- On 19 April 2000 the directors and Mr. Shaw had an acrimonious meeting with Miss Woodall. Later that day the directors and Mr. Shaw had a meeting with all the employees. Mr. Shaw then dictated a letter of dismissal to be sent to all employees and those letters were dispatched almost immediately. On 13 June 2000 Mr. Grant and Mr. Shaw met first the non-union representatives and later Miss Woodall and a GMB shop steward and discussed possibilities to save the factory. There was no further contact between the GMB and the Company and the factory closed on 14 July 2000.
- An Originating Application was presented promptly by the GMB, seeking a protective award on behalf of its members. 29 non-GMB employees also lodged Originating Applications. The Company denied any entitlement to a protective award. The GMB members also themselves presented Originating Applications complaining of unfair dismissal, a complaint also made by the non-GMB employees.
- An ET sitting at Newcastle-upon-Tyne heard the applications on 19 December 2001. By their reserved decision sent to the parties on 13 May 2002, the ET found that prior to 20 March 2000 the Company was proposing the closure of the factory and the redundancy of the workforce, that at the meeting with Miss Woodall on 19 April 2000 the Company had provided none of the information required by s. 188 (4) of the 1992 Act and that there was no consultation either with her, that the meeting with all the employees was not a meeting with the representatives of the employees as required by s. 188 (1B) of the 1992 Act and that on 13 June 2000 the Company was "going through the motions of what [it] considered to be consultation". The ET expressed their conclusion on this topic in para. 40 of the decision:
- The ET said of the complaint of unfair dismissal in para. 41:
- Accordingly the ET decided that
- The Company then appealed against the first three parts of that decision. The appeal was heard by the Employment Appeal Tribunal ("the EAT"), His Honour Judge Levy Q.C. presiding, who dismissed the appeal. On the protective award the EAT said that the award made by the ET was one which could be properly considered just and equitable in the circumstances, the fact which really concerned the ET having been the clear lack of consultation throughout the period.
- Permission to appeal to this court on a number of grounds was sought by the Company but refused by the EAT and, on application to this court, by Keene L.J. on paper. However, on a renewed application, this court (Keene and Scott Baker L.JJ.) allowed the appeal to go ahead on grounds limited to the protective award. In granting permission, Keene L.J. noted that Mr. Sean Jones for the Company had told the court that there is considerable variation in the practice of ETs over protective awards and that no guidance had yet been given by this court as to the approach to be adopted by ETs in relation to their exercise of discretion or the factors which should be reflected in any award.
- Before I consider the rival submissions made to us, it is convenient to set out the statutory provisions relevant to the appeal.
- The provisions with which we are concerned are in Chapter II of Part IV of the 1992 Act, that chapter relating to the procedure for handling redundancies. The relevant provisions were originally contained in ss. 99 – 107 of the Employment Protection Act 1975 ("the 1975 Act"). They were enacted to give effect to Council Directive 75/129/EEC ("the 1975 Directive"). By the 1975 Directive it was recited that it was important that greater protection should be afforded to workers in the event of collective redundancies (defined to mean dismissals effected by an employer for one or more reasons not related to the individual workers concerned, above a specified minimum number). The 1975 Directive provided for a consultation procedure which had to be followed by the employer. It has now been replaced by Council Directive 98/59/EC, Article 6 of which requires member states to ensure that "judicial and/or administrative procedures for the enforcement of obligations under the Directive are available to the workers' representatives and/or workers".
- There is no mention in either Directive of any protective award. Nothing is expressly stated as to any sanction for any failure to comply with the consultative procedure. However, it is not in dispute that Article 10 of the EC Treaty requires member states to take all measures necessary to ensure that infringements of Community law are "penalized under conditions …. which, in any event, make the penalty effective, proportionate and dissuasive." (Commission v Greece [1989] ECR 2965 at p. 2985 para. 24.)
- By s. 188 (1) and (1A) of the 1992 Act (as amended):
- S. 188 (1B) provides who are the appropriate representatives of any affected employees. If the employees are of a description in respect of which an independent trade union is recognised by their employer, those representatives are representatives of the trade union. In any other case, the appropriate representatives are employee representatives as specified in para. (b) of s. 188 (1B).
- By s. 188 (2):
- S. 188 (4) provides:
- S. 189 is in this form, so far as material:
- By s. 189 (5) the ET are not to consider a complaint unless presented to them before the date on which the last of the dismissals to which the complaint relates takes effect or in the 3-month period beginning with that date or such further period as the ET consider reasonable where the ET are satisfied that presentation within the 3-month period was not reasonably practicable.
- By s. 190 the employer is obliged to pay remuneration for the protected period to every employee of a description to which the protective award relates. Ss. 190 and 191 contain provisions limiting that right to be paid remuneration. For example, under s. 190 (4), the employee is not entitled to remuneration under a protective award in respect of a period during which he is employed by the employer unless entitled to be paid by the employer in respect of that period by virtue of his employment contract or his rights in a period of notice. Other provisions terminate the right to payment if the employee dies during the protected period (s. 190 (6)) or is fairly dismissed or unreasonably terminates the contract of employment (s. 191 (1)).
- S. 190 (3), until repealed in 1993, provided for a set off of certain payments made by an employer to an employee in respect of a period within the protected period against the employer's liability to pay the protective award. However, in Commission v U.K. [1994] ICR 664 the European Court of Justice at paras. 42 – 44 pp. 725, 6 held that s. 190 (3) largely deprived what it called "that sanction" (viz. the protective award) of its practical effect and "its deterrent value", and pointed out that an employer will not be "penalised" by "the sanction" except and only to the extent that the protective award exceeds the sums which he is otherwise required to pay to the employee. That court therefore held that the United Kingdom, "by failing to provide for effective sanctions in the event of failure to consult" as required by the 1975 Directive, had failed to fulfil its obligations under that Directive and Article 5 of the EEC Treaty.
- Mr. Jones for the Company makes the following submissions, which I summarise in my own words:
- Mr. Philip Mead for the GMB and other respondents submits that
- The following features of the statutory provisions can be identified as relevant:
- In the light of those features, despite Mr. Jones's submissions to the contrary, it seems to me tolerably plain that the purpose of the protective award is to ensure that consultation in accordance with the requirements of s. 188 takes place by providing a sanction against failure to comply with the obligations imposed on the employer. The potential severity of that sanction can be seen from the facts of the present case where the award, we are told, will cost the Company some £250,000 by way of remuneration for the employees made redundant.
- Whilst that sanction results in money being paid to the employees affected in the form of remuneration paid to them, there is nothing in the statutory provisions to link the length of the protected period to any loss in fact suffered by all or any of the employees. Their dismissals may not take effect at the same date. Their individual circumstances, for example whether another job immediately became available, may well differ. The required focus is not on compensating the employees but on the default of the employer and its seriousness. It is that seriousness which governs what is just and equitable in all the circumstances. I find it impossible to see how compensation for loss could be implied into the statutory provisions, given that the award, if one is to be made, is across the board for all employees falling within a particular description, as distinct from an individual award to each employee.
- In Association of Patternmakers & Allied Craftsmen v Kirvin Ltd. [1978] IRLR 318 Lord McDonald, giving the judgment of a Scottish EAT, adverted to the punitive nature of the protective award when he said at p. 319 para. 1:
- I have already noted the decision of the European Court of Justice in Commission v U.K. that the United Kingdom had, because of s. 190 (3), failed to provide for effective sanctions for a failure to consult as required by the 1975 Directive and so breached the obligations under that Directive and Article 5 of the Treaty. It is therefore clear that the ET's ability to make a protective award, albeit discretionary, must be taken as intended to fulfil an obligation under European Community law to provide an effective sanction for breach of the employer's obligation to consult.
- However, it is only too apparent from the reported decisions of English EATs to which our attention has been drawn that the approach in this jurisdiction has been rather different.
- To my mind matters went wrong in the first of those decisions, Talke Fashions Ltd. v Society of Textile Workers [1978] 1 WLR 558. In that case the employer without consultation announced the closure of two factories and the redundancy of the workforce, at one factory in 15 days' time and, at the other, in 63 days' time. The ET made a protective award of 60 days. On appeal by the employer, the EAT, Kilner Brown J. presiding, by a majority (Mr. Bill Sirs dissenting) allowed the appeal in part. They unanimously thought that the ET were misled into thinking that statutory provisions were merely penal, but Mr. Sirs thought that the ET came to the right answer because, once the ET decided to make an award, it should be of the maximum period unless the employer could show mitigating factors, and there was none.
- Kilner Brown J. at p. 560 said of what is now s. 189 (4)(b):
- Kilner Brown J. said that the EAT preferred to regard the imposition of penalties for bad behaviour as a retrograde step in the field of legislation dealing with good industrial relations and the giving of compensation to employees unfairly treated or discriminated against. He said that the EAT were entitled to look at the various Acts as a whole and that they intended to follow the broad scope of all the modern legislation and to look to the loss suffered by the employee and to concentrate on compensation. Because the legislation then in force linked the period of an award with the period of notice to a trade union for the purpose of consultation, the primary consideration, he said, was to assess the consequences to the employee. He continued (at p. 561):
- The EAT dismissed the appeal in relation to the employees given only 15 days' notice and halved the protected period in relation to the other employees.
- I respectfully disagree with the approach adopted in Talke. The EAT in that case concentrated not so much on the actual words of the statutory provisions governing a protective award but on generalised notions derived from other employment legislation. No account was taken of the origin of the statutory provisions relating to consultation, that is to say that they were intended to implement the 1975 Directive. It seems to me impermissible to construe specific provisions in an Act implementing a Directive by reference to what are perceived to be principles contained in other legislation. A statutory purpose of compensation for loss suffered by an employee was found by the EAT even though there is no mention of compensation or loss in the relevant provisions and it is plain that the protective award is a collective award.
- Kilner Brown J. was again presiding in three differently constituted EATs in three further cases in which Talke was referred to with approval (see Clarks of Hove Ltd. v Bakers' Union [1978] 1 WLR 563, TGWU v Gainsborough Distributors [1978] IRLR 460 and Joshua Wilson & Bros. Ltd. v USDAW [1978] ICR 614).
- A rather more conventional approach to statutory construction was adopted in Spillers French (Holdings) Ltd. v USDAW [1980] ICR 31. In that case the employer had closed bakeries, making employees redundant, without consultation. The ET determined as a preliminary issue that the ET could make a protective award even if none of the employees had suffered any loss. Slynn J., giving the judgment of the EAT, adverted to the fact that in the employment legislation there were provisions where sums were to be paid without any assessment of actual loss being made. He continued at p. 37:
- Slynn J. said that it was "striking" that s. 105 (5) of the 1975 Act, the then equivalent of s. 189 (4), did not refer to loss suffered by the employee. He continued at p. 38:
- After consideration of the authorities and noting that Talke and the TGWU case provided support for the views that what is to be done is to compensate, Slynn J. said at p. 40:
- The EAT accordingly decided that the ET came to the correct decision and remitted the case back to the ET for them to decide whether there should be a protective award and, if so, what should be the length of the protected period.
- With much of what was said in Spillers French I am in respectful agreement. Where I respectfully differ is as to the utility of introducing the notion of compensation for the loss of days of consultation. No doubt the language of compensation was used because of what was said in Talke that what is to be done by the protective award is to compensate. For the reasons given, there is no basis for that. Further I have some difficulty in seeing how in practice the loss of days of consultation is to be computed. Although this part of the decision in Spillers French has frequently been cited and followed by EATs, it seems to me that the more practical approach in a case where there has been no consultation is to do what Mr. Sirs suggested in Talke to be correct, viz. to start with the maximum protected period and reduce it if there are circumstances justifying a reduction. That was held by a Scottish EAT (Lord Coulsfield presiding) to be the proper approach (GMB v Rankin and Harrison [1992] IRLR 514).
- Mr. Jones placed considerable reliance on what Slynn J. had said at p. 40, against the background of fact that there had been no consultation, that if the employer had done everything that he could possibly do to ensure that his employees are found other employment, the ET might well take the view that there should be no award or only a nominal award. That, Mr. Jones submitted, indicated that Slynn J. took the view that the obligation to have regard to the seriousness of the employer's default involved consideration of the consequences to the employees resulting from the failure to consult. Mr. Jones relied on this in support of his argument that the ET should consider the extent to which the legislative purpose was frustrated, and that the futility of consultation, as found by the ET in the present case when rejecting the unfair dismissal claim, should have led the ET to conclude that they should make no protective award or only a nominal award.
- To the extent that the EAT were saying in Spillers French that, despite a complete failure to consult, the ET could properly conclude that no, or only a nominal, award was appropriate merely because of the employer's efforts to find alternative employment for the employees, I would respectfully disagree. Given the absolute obligation on the employer to consult, and to consult meaningfully, I cannot accept that a wholesale disregard of the obligations imposed on the employer by s. 188 could properly lead to such a result. I do not believe that Slynn J. was suggesting that the consequences to individual employees were relevant to the seriousness of the employer's default. Instead he seems to me to have been saying that what the employer did by way of finding the employees other employment would be a relevant consideration for the ET. Even on that point I respectfully doubt the significance attached to it by Slynn J., because the employer's obligation under s. 188 (2)(c) was to consult about ways of mitigating the consequences of the dismissals; unilateral action by the employer without consultation seems to me not only to fail to comply with the obligation but to be likely to be less effective mitigation.
- In any event I cannot accept Mr. Jones's submission that the futility of consultation is not only relevant to the issue of unfair dismissal and to the denial of any compensation but is also relevant to making no protective award or only a nominal award. I of course accept that in the light of Polkey v A. E. Dayton Services Ltd. [1988] AC 344 the exceptional case may occur where the ET can properly find that the employer at the time of the employees' dismissal acted reasonably in taking the view that procedural steps, such as consultation, normally appropriate could not have altered the decision to dismiss and therefore could be dispensed with. However, for the purpose of a protective award, as distinct from unfair dismissal, the required focus is on the seriousness of the employer's default in complying with the mandatory obligation to consult. I respectfully agree with the observations of the EAT (His Honour Judge Peter Clark presiding) in Middlesborough Borough Council v TGWU [2002] IRLR 332 at p. 338 para. 47, referring to s. 188:
- Further in any event there may be insurmountable problems were it relevant to consider the consequences to individual employees of the failure to consult. Suppose that for half the employees of the relevant description there were no adverse consequences. How should that affect the length of the protected period? Given that there is but one award in respect of all within that description, it might be thought that to halve the award would be unjust and inequitable to those for whom the consequences were adverse and would be overgenerous to those for whom there were no adverse consequences. To determine whether to make a protective award and if so for what length of time on that basis would be unworkable in such a case.
- I suggest that ETs, in deciding in the exercise of their discretion whether to make a protective award and for what period, should have the following matters in mind:
- In my judgment in guiding themselves as they did in para. 40 of their decision the ET, for the reasons I have given, did not misdirect themselves in law. On the facts of this case I readily acknowledge that another ET might have taken a less serious view of the default given the relatively generous notice period. However, I find it impossible to say that the decision to make a protective award of the maximum period was perverse, given the findings that no consultation at all took place, although the Company had been advised by its solicitor of the need for consultation, that on one occasion when consultation might have taken place, the Company was merely going through the motions of what it considered to be consultation – a far cry from meaningful consultation with a view to reaching an agreement – and that none of the information required to be supplied in writing was supplied.
- It follows that I would dismiss this appeal.
- I agree with the judgments of my Lords, Lord Justice Peter Gibson and Lord Justice Longmore, which I have had the opportunity of reading in draft.
- It may at first sight seem surprising to say that the fact that consultation would have been futile is something which an employment tribunal should not take into account when assessing the length of time for which a protective award should be made. But the argument that took place has convinced me (1) that there is nothing in the statutory wording which requires such futility to be taken into account and (2) that in a collective claim brought by a union it would be impossible to take such futility into account in a fair and practical way. If some employees are not affected at all and others are affected (perhaps some of them in different ways) there is no fair way in which it can be taken into account.
- I therefore agree that the guidance on this point given in Talke Fashions Ltd v Amalgamated Society of Textile Workers and Kindred Trades [1978] 1 WLR 558 and Spillers-French (Holdings) Ltd v USDAW [1980] ICR 31 should no longer be treated as authoritative and that henceforth employment tribunals making protective awards should assess the length of the award by reference to the judgment of Peter Gibson LJ in this case. I too would dismiss this appeal.
Peter Gibson L.J.:
The facts
"Subject to any consultations, the proposed method of dismissal will be by serving a 12 week notice of dismissal for reasons of redundancy anticipated to terminate on 14 July 2000."
The proceedings
"We therefore come to the conclusion that the application for a protective award is well-founded and that the respondents are entitled to a declaration to that effect. We have to consider the period. We consider that 90 days is appropriate. [Counsel for the Company] argues that because the respondents gave an extended notice period of twelve weeks to the employees, which was not necessary, that the protective award should be nil. We cannot agree with that. The purpose of the protective award is to ensure that the employers carry out proper consultation. No consultation was carried out in this case. The requirements of section 188 require 90 days minimum consultation which did not take place. The Tribunal has to consider the employers default in [not] complying with section 188 of the 1992 Act. We have found that there was no consultation. The respondents failed completely to comply with section 188. That is serious. We therefore conclude that it is appropriate that a period of 90 days be the protective award period."
"So far as unfair dismissal is concerned we accept that the applicants were dismissed for redundancy which is a potential fair reason and that the respondents have shown that reason. In so far as fairness is concerned this was a closure of the whole of the factory. There was no possibility of it remaining open. A decision had been made to close it and that all of the employees would be made redundant. There was no need for any selection procedure or any individual consultation because that consultation would have resulted in the same position at the end of the day. None of the employee[s] could have saved their jobs by any individual consultation. There was no alternative employment available. We do not find that there was an unfair dismissal."
(1) the complaints under ss. 188 and 189 of the 1992 Act were well founded,
(2) a protective award should be made in respect of such of the former employees of the Company as it dismissed by reason of redundancy on or after 14 July 2000,
(3) the protected period should be 90 days beginning with 14 July 2000, and
(4) the former employees were fairly dismissed.
The statutory provisions
"Duty of employer to consult … representatives
(1) Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.
(1A) The consultation shall begin in good time and in any event –
(a) where the employer is proposing to dismiss 100 or more employees as mentioned in subsection (1), at least 90 days, and
(b) otherwise, at least 30 days,
before the first of the dismissals takes effect."
"The consultation shall include consultation about ways of –
(a) avoiding the dismissals,
(b) reducing the numbers of employees to be dismissed, and
(c) mitigating the consequences of the dismissals,
and shall be undertaken by the employer with a view to reaching agreement with the appropriate representatives."
This was a new provision introduced in 1995 but giving effect to provisions in Article 2 of the 1975 Directive.
"For the purposes of the consultation the employer shall disclose in writing to the appropriate representatives –
(a) the reasons for his proposals,
(b) the numbers and descriptions of employees whom it is proposed to dismiss as redundant,
(c) the total number of employees of any such description employed by the employer at the establishment in question,
(d) the proposed method of selecting the employees who may be dismissed,
(e) the proposed method of carrying out the dismissals, with due regard to any agreed procedure, including the period over which the dismissals are to take effect, and
(f) the proposed method of calculating the amount of any redundancy payments to be made (otherwise than in compliance with an obligation imposed by or by virtue of any enactment) to employees who may be dismissed."
"Complaint … and protective award
(1) Where an employer has failed to comply with a requirement of section 188 …., a complaint may be presented to an employment tribunal on that ground –
….
(c) in the case of failure relating to representatives of a trade union, by the trade union, and
(d) in any other case, by any of the affected employees or by any of the employees who have been dismissed as redundant.
….
(2) If the tribunal finds the complaint well-founded it shall make a declaration to that effect and may also make a protective award.
(3) A protective award is an award in respect of one or more descriptions of employees –
(a) who have been dismissed as redundant, or whom it is proposed to dismiss as redundant, and
(b) in respect of whose dismissal or proposed dismissal the employer has failed to comply with a requirement of section 188,
ordering the employer to pay remuneration for the protected period.
(4) The protected period –
(a) begins with the date on which the first of the dismissals to which the complaint relates takes effect, or the date of the award, whichever is the earlier, and
(b) is of such length as the tribunal determines to be just and equitable in all the circumstances having regard to the seriousness of the employer's default in complying with any requirement of section 188;
but shall not exceed 90 days …."
The rival submissions
(1) The purpose of the discretionary protective award is compensatory, not punitive.
(2) The ET, in exercising their discretion as to the period of the protective award, were obliged to –
(a) award a protected period of such length as was just and equitable in all the circumstances, and
(b) have regard to the seriousness of the Company's default in complying with its obligations.
(3) The fact that, as the ET found in relation to unfair dismissal, consultation would have made no difference is
(a) one of the circumstances to be taken into account in assessing what length would be just and equitable for the protected period, and
(b) a factor relevant to the assessment of the seriousness of the Company's default.
(4) In considering the seriousness of the default, the ET should have considered to what extent the underlying legislative purpose of ss. 188 and 189 (to be found by reference to s. 188 (2)) was frustrated.
(5) The ET failed to take account of the futility of consultation or, if they did, they made a decision which was perverse.
(1) the purpose of the protective award is to provide a sanction for the employer's breach of the obligation to consult and is not concerned with loss suffered by the employees consequent on that breach;
(2) the ET are given a wide discretion as to the protective award and the length of the protected period;
(3) there should be no interference with the exercise of discretion unless the ET have erred in principle or were plainly wrong;
(4) the ET, having found that there was no consultation at all and a failure to supply the appropriate information in writing, were entitled to exercise their discretion to grant a protective award with a protected period of the maximum length.
Discussion
(1) An absolute obligation is imposed on the employer to consult the appropriate representatives of employees who may be affected by the proposed dismissals, such consultation to be in good time and to be conducted with representatives who are fully informed by reason of the required disclosure specified in s. 188 (4). Moreover, because the disclosure must be in writing, there can be no dispute as to the extent of the disclosure in fact made.
(2) The topics for the consultation must include the matters specified in s. 188 (2) and the employer must undertake the consultation not as an end in itself but with a view actually to reach agreement.
(3) The consequences of a finding by the ET that the complaint is well-founded are the mandatory declaration to that effect and, if the ET chose to exercise their discretion, the making of the protective award. No other sanction is provided.
(4) The references to protection in the defined terms, "a protective award" and "the protected period", are not explained by any other reference to protection in the domestic statutory provisions nor in the Directives, although the 1975 Directive refers to the importance of greater protection for workers affected by collective redundancies.
(5) The protective award is expressed to be in respect of one or more descriptions of employees affected, rather than in respect of individuals; it is a collective award.
(6) That the particular circumstances of individuals are not the focus of attention in the statutory provisions is also brought out by the fact that the protected period begins with the date on which the first of the dismissals to which the complaint relates takes effect (unless the date of the protective award is earlier) and that the limitation period for bringing a complaint under s. 189 is defined by reference to the date on which the last of the dismissals to which the complaint relates takes effect, regardless of the dates on which the dismissals of others to whom the complaint refers take effect.
(7) A protective award imposes an obligation on the employer to pay remuneration, quantified in s. 190, during the protected period and confers an entitlement on every employee of a description to which the award relates to be paid remuneration during that period, subject to the specified limits and exceptions in ss. 190 and 191; the ET in making that award and in fixing the length of the protected period are not directly concerned with the remuneration and its quantum in the case of individual employees.
(8) There is no reference whatever to compensation or loss in the provisions relating to the protective award, in contrast to the other statutory provisions in employment legislation using the formula "just and equitable in all the circumstances having regard to" (see, for example, ss. 60 (4), 80 (4) and 123 (1) of the Employment Rights Act 1996 ("the 1996 Act")).
(9) The only guidance given as to the length of the protected period is that, subject to a maximum of 90 days, it is to be what the ET determine to be "just and equitable in all the circumstances having regard to the employer's default in complying with any requirement of section 188."
"A Tribunal, however, is specifically enjoined to determine the [protected] period and so the amount of the award by paying regard to the seriousness of the employer's default. This introduces a punitive element into the jurisdiction of an Industrial Tribunal and in contrast with eg, the calculation of a compensatory award which is based upon what is just and equitable having regard to the loss sustained."
"In linking the maximum period of a protective award with the period of notice and consultation required before dismissing for redundancy the legislation would appear to contemplate an award of compensation commensurate with the loss suffered by an employee who has been given short shrift in a redundancy situation. This is consistent with the whole spirit of both the Redundancy Payments Act 1965 and, more particularly, the Trade Union and Labour Relations Act 1974."
He continued:
"The other factor which has to be considered when reaching an answer which is just and equitable is the seriousness of the employer's default. The wording seems to us to be singularly unfortunate. Does this import an element of punishment for a bad breach of industrial relations? We are told that many industrial tribunals do so regard it. Indeed, in this instant case Mr. Lisle, the well known and much respected general secretary of the trade union involved, made no bones about it. In a submission reminiscent of a (foreign) public prosecutor calling for a maximum punishment, he maintained that it was a penal clause and a bad case of default called for the maximum period of award against the employer. If this interpretation and this approach be right, then this part of this subsection is wholly inconsistent with the spirit of the Trade Union and Labour Relations Act 1974."
"Whether or not the employer's conduct should be penalised seems to us to beg the question. In other words the seriousness of the default ought to be considered in its relationship to the employees and not in its relationship to the trade union representative who has not been consulted."
"So it seems to us that despite the background of the desire to encourage consultation in order to avoid liability for unfair dismissal, and also despite the fact that in some areas the object of Parliament is clearly seen to be purely one of compensation, we have to look at the particular sections with which we are concerned and decide what precisely they lay down.
It seems to us that here it is important to bear in mind that the obligation which is imposed upon an employer is one in respect of descriptions of employees."
"So it would seem that basically the question is, how serious was the employer's default in complying with the requirements of section 99? Obviously there can be defaults of different gravity. For example, one requirement of the Act is that necessary information shall be disclosed in writing. It might be that if all the information had been given orally to a trade union representative, a tribunal would not take a very serious view of that as a failure to comply with a requirement. On the other hand, failure to give reasons at all, or failure to include one of the matters specified in section 99 (5), might be more serious. A failure to consult at all, or consultation only at the last minute, might be taken to be even more serious."
(S. 99 of the 1975 Act contains provisions now in s. 188. S. 99 (5) is the equivalent of s. 188 (4).)
"But that does not seem to us to be the end of the question. The question is, to compensate for what? It seems to us that it is to compensate for the failure to consult. It seems to us that here Parliament is providing that employers should, in this kind of potential or actual redundancy situation, discuss the matter with the union and the Secretary of State in the hope of achieving one or other of the alternative courses to which we have referred. True it is that the tribunal has power to make a declaration. It seems to us that there is a duty, in the appropriate case, to make a declaration. In addition it seems to us that Parliament has given to the industrial tribunals the power, if they so decide, also to make a protective award which involves the payment of money. It seems to us that when that decision is taken, the question which has to be looked at is not the loss or potential loss of actual remuneration during the relevant period by the particular employee. It is to consider the loss of days of consultation which have occurred. The tribunal will have to consider, how serious was the breach on the part of the employer? It may be that the employer has done everything that he can possibly do to ensure that his employees are found other employment. If that happens, a tribunal may well take the view that either there should be no award or, if there is an award, it should be nominal. It does not seem to us that the tribunal has to be satisfied, before it can make an award, that the employees have been paid during the relevant period. Indeed, if the application is made before the dismissals take place, these facts may not be known. It might be quite impossible to know, until the end of the period, what is the position so far as earnings from the same employer or from other sources are concerned."
"The duties under the section are mandatory. It is not open to an employer, for this purpose, to argue, as would be open to him in defending a complaint of unfair dismissal by the individual employee, that consultation would, in the circumstances, be futile or utterly useless: see Polkey …."
(1) The purpose of the award is to provide a sanction for breach by the employer of the obligations in s. 188: it is not to compensate the employees for loss which they have suffered in consequence of the breach.
(2) The ET have a wide discretion to do what is just and equitable in all the circumstances, but the focus should be on the seriousness of the employer's default.
(3) The default may vary in seriousness from the technical to a complete failure to provide any of the required information and to consult.
(4) The deliberateness of the failure may be relevant, as may the availability to the employer of legal advice about his obligations under s. 188.
(5) How the ET assesses the length of the protected period is a matter for the ET, but a proper approach in a case where there has been no consultation is to start with the maximum period and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the ET consider appropriate.
Conclusion
Laws L.J.:
Lord Justice Longmore: