Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF:   1898/09

 

 

 

CLAIMANT:                      USDAW

 

 

RESPONDENT:                WW Realisation 1 Limited (In Administration)

 

 

DECISION

The unanimous decision of the tribunal is as follows:

(A)           It is declared that the claimant’s complaint is well-founded.

(B)           The tribunal has decided to make a protective award in respect of all of those employees of the respondent who have been dismissed as redundant and who are within the scope of these proceedings.  (See below).

(C)           It is ordered that the employer shall pay remuneration for the protected period.

(D)           In relation to each relevant establishment, the protected period began on      1 January 2009 and ended on 1 March 2009. 

(E)           An employee is within the scope of these proceedings if all of the following applied to that employee:  (1)  The employee was employed by the respondent in Northern Ireland and was made redundant by the respondent from December 2008 onwards.  (2) The employee fell within a description of employees in respect of which the claimant was recognised by the respondent.

 

Constitution of Tribunal:

Chairman:    Mr Buggy    

Members:    Ms Kennedy

                    Dr Mercer

 

 

Appearances:

 

The claimant was represented by Mr R Fee, Barrister-at-Law, instructed by Russell Jones Walker Solicitors.

 

The respondent was not represented.

 

 

REASONS

 

1.       The full name of the claimant is “The Union of Shop, Distributive and Allied Workers”.

 

 

2.       The respondent (which was formerly known as Woolworths Plc) went into administration on 27 November 2008.

 

3.               The respondent was not represented at this hearing.  However, the respondent’s solicitors wrote to the Secretary of the tribunals on 16 December 2009.  In adjudicating upon this case, we have carefully taken account of the information which is contained in the respondent’s response in these proceedings, in the letter of 16 December 2009 and in the enclosures which accompanied that letter.

 

Some key statutory provisions

 

4.               Relevant statutory provisions are to be found in Articles 216 - 220 of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”).  All of those provisions are contained in Part XIII of the 1996 Order, which is entitled “Procedure for handling redundancies”.

 

5.               The Trade Union and Labour Relations (Consolidation) Act 1992 (”the 1992 Act”), which applies only to Great Britain, deals with protective awards, at Chapter II of Part IV of the 1992 Act.  That Chapter is entitled “Procedure for handling redundancies”.

 

6.               For all practical purposes, in the present context, the provisions of Chapter II (of Part IV) of the 1992 Act can be treated as being identical to the provisions of Part XIII of that 1996 Order.

 

7.               Chapter 17 of Division E of “Harvey on Industrial Relations and Employment Law” contains a commentary on the legal effect of the relevant provisions which are contained in the 1992 Act.  In our view, Chapter 17 of Division E is also an accurate commentary on the principles which have to be applied in the context of Part XIII of the 1996 Order.

 

8.               Each set of provisions has to be regarded as legislation which was enacted for the purpose of complying with the Collective Redundancies Directive (75/129/EEC), as amended.

 

9.               Article 216(1) of the 1996 Order provides that, 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 must 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. 

 

10.           Article 216(2) provides that the consultation must begin “in good time” and in any event:

 

“(a)  where the employer is proposing to dismiss 100 or more employees as mentioned in paragraph (1), at least 90 days and

 

(b)    otherwise, at least 30 days,

 

before the first of the dismissals takes effect”.

 

11.           Article 216(3) provides that, for the purposes of that Article, representatives of a particular trade union are the appropriate representatives of any affected employees if those employees are of a description in respect of which that union is recognised by the employer.

 

12.           Article 216(4) provides that the relevant consultation must include consultation about ways of avoiding the dismissals, about ways of reducing the number of employees to be dismissed, and about ways of mitigating the consequences of the dismissals.  Article 216(4) also provides that the relevant consultation is to be undertaken, by the employer, “with a view to reaching agreement” with the appropriate representatives.

 

13.           Article 217 of the 1996 Order provides that where an employer has failed to comply with a requirement of Article 216, a trade union is the appropriate complainant (in the context of the presentation of an Article 217 complaint to an industrial tribunal), in the case of failure relating to representatives of that trade union.

 

14.           Article 217(2) provides that if the tribunal finds the complaint to be well-founded, it must make a declaration to that effect and may also make a protective award.

 

15.           Article 217(3) explains that a protective award is an award in respect of one or more descriptions of employees, who fall within the lists specified in Article 216(3), and that any such award will order the employer to pay remuneration for “the protected period”.

 

16.           Article 217(4) provides that the protected period (except in circumstances which are inapplicable in the present context) begins with the date on which the first of the dismissals, to which the complaint relates, takes effect.

 

17.           The same paragraph provides that the protected period must not exceed 90 days.  Subject to that overall maximum, Article 217(4) provides that the protected period is to be 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 Article 216.

 

18.           The Article 216 duties are subject to the potential defence of reasonable practicability.  Article 216(9) is in the following terms:

 

“(9)  If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with a requirement of paragraph (2), (4) or (6), the employer shall take all such steps towards compliance with that requirement as are reasonably practicable in those circumstances”.

 

Article 217(6) provides that if a question arises as to whether there were special circumstances which rendered it not reasonably practicable for the employer to comply with any requirement of Article 216, or whether the employer took all such steps towards compliance with that requirement as were reasonably practicable in those circumstances, it is for the employer to show “that there were [special circumstances] and that he did [take all reasonably practicable steps toward compliance]”.

 

The issues

 

19.           The main issues in this case can be summarised as follows:

 

(1)            In the circumstances of this case, were there “special circumstances” within the meaning of Article 216(9) of the 1996 Order and, if so, did the employer take all such steps towards compliance, with the relevant consultation requirements, as were reasonably practicable in those circumstances?

 

(2)            Subject to the “special circumstances” issue, did Woolworths comply with the consultation obligation which are contained in Article 216(1) of the Order (and which must, in the present context, be read in conjunction with Article 216(6) of the 1996 Order)?

 

(3)            If the tribunal decides to make a protective award, what should be the duration and period of that award?

 

The course of the proceedings

 

20.     As already noted above, Woolworths was the subject of an Administration Order in late 2008.  This was an English Administration Order.  The parties are not in agreement on the question of whether or not the existence of an Administration Order of the English High Court operates, without more, as an automatic barrier to the institution or continuance of employment tribunal proceedings in Northern Ireland.  However, that issue does not have to be resolved in relation to this particular claim, because the administrators have, in any event, given their consent to the continuation of these protective award proceedings.

 

The evidence and the arguments

 

21.           With their letter of 16 December 2009, the respondent’s solicitors enclosed a copy of the collective agreement between Woolworths and USDAW dated 17 May 2007.  With the same letter, they also enclosed a copy of the letter dated 17 December 2008 which was sent by one of the administrators to the employees’ representatives, following an information and consultation meeting which was held on 16 December 2008.

 

22.           During the course of the main hearing, Mr Fee, (on behalf of the claimant) referred us to a bound bundle of documents.  We told him that, for evidential purposes, we would not have regard to any document within that bundle unless our attention had been drawn, during the course of the main hearing, to that particular document.  During the hearing, we received oral testimony from Mr John Gorle, a full-time official with USDAW, who gave evidence on behalf of the claimant.

 

23.           Mr Fee provided us with a written skeleton argument which, clearly and succinctly set out many of the key principles in this area of law.  In arriving at this Decision, we have also derived assistance from the arguments which are set out in the response and in the respondent’s solicitors’ letter of 16 December 2009.

 

The facts

 

24.           We now set out findings of fact which are relevant to the issues which we have determined:

 

(1)            We are satisfied that Mr Gorle’s testimony in these proceedings was truthful and accurate.

 

(2)            USDAW was recognised by Woolworths in respect of all staff employed in its Northern Ireland stores in grades A-E (or such grade nominations as have replaced those grades where the grades have been renamed).

 

(3)            Woolworths was placed into administration on 27 November 2008.  Neville Kahn, Daniel Butters and Nick Dargan, all of Deloitte, were appointed as administrators.

 

(4)            The administrators tried to find a purchaser for some or all of the business of Woolworths.  However, despite negotiations with a number of interested parties, it became clear that no sale was likely to take place.  It therefore became likely that there would be a need to make Woolworths’ employees redundant.

 

(5)            Woolworths does not contend that any collective redundancy consultation process began prior to 16 December 2008 (See paragraph (3) of the “Defence” in this case).

 

(6)            During the period which is relevant in the context of the present proceedings, Woolworths employed approximately 27,000 employees, of whom 3,500 were USDAW members.

 

(7)            The administrators did not attempt to carry out any consultation process with USDAW on its own.  Instead, USDAW was “consulted” simultaneously, at the same meeting, with the members of Woolworths “Employee Circle”, which is an elective employee representative body which Woolworths set up.  At the “consultation” meeting which took place in London on 16 December 2008, most of the participants on the employee side participated via conference call.  (That was the option which they were encouraged to opt for by Woolworths.  Furthermore, the meeting was called at such short notice that most participants were not readily able to attend in person).  The meeting was used mainly for the purpose of announcing, to the participants, what the administrators had already decided, regarding the numbers of redundancies, the timing of redundancies, and the associated modalities.

 

(8)            In Northern Ireland, all Woolworths’ employees at Woolworths’ 19 Northern Ireland stores (approximately 700 staff in all) were made redundant between 30 December 2008 and 7 January 2009, with the exception of a small skeleton staff who were retained on a temporary basis to finalise post-trading administrative arrangements.

 

(9)            We do not accept that it was not practicable for the administrators to consult with USDAW during the period from the date of the administration order until 16 December 2009.  They could have consulted on a confidential basis, using tried and tested confidentiality arrangements, which had been constructively operated, by both management and the union, in the Woolworths’ context, over a period of many years.

 

(10)         Understandably, the main focus of the administrators, when the administration commenced, was to find a purchaser for the whole of, or parts of, the Woolworths business.  If news had entered the marketplace regarding collective redundancy consultation, the chances of finding a purchaser to acquire the business on acceptable terms would not have diminished.  Instead, the market would have recognised that the administrators were covering all potential eventualities.

 

(11)         We accept that it was crucial for the business to cease trading as soon as possible following the Christmas period when it became clear that no purchaser was likely.  We accept that this was necessary in order to limit Woolworths’ losses and maximise value for creditors.

 

(12)         In our view, it would have been entirely practicable for the administrators to have kept USDAW informed, in general terms, about its efforts to achieve potential sales of the business, during the period leading up to 16 December.  We are satisfied that, during that period, USDAW was not provided with significant relevant information in that connection which was not already in the public domain.  We are not satisfied that the main reasons for the reticence of the administrators in this connection was the imposition, by potential purchasers, of requirements of confidentiality.

 

(13)         During the period from the date of the administration order until 16 December, USDAW was left in the humiliating position of learning much of what it came to know, regarding the issues relating to potential job losses in Woolworths, from information sources which were available to Woolworths’ staff generally, or to the public generally.

 

(14)         Some example:  (1) On 10 December 2008, there was press speculation that the administrators would attempt to liquidate the stock by holding a closing down sale.  USDAW had not been informed of any such plans directly by the administrators.  (2) Mr Gorle received an email from an USDAW representative on the evening of 10 December which had attached an “update” message from the administrators and some “question and answers”.  Those documents had been posted on the Woolworths’ Intranet without any consultation or prior notification with USDAW.  (3) On 10 December 2008 Mr Gorle was watching the evening news when he was astonished to see Mr Malcolm Walker, the Chief Executive of the Iceland Group of stores, announcing that they had bought 51 stores from Woolworths.  He had not been given any advance notification by the administrators of that development.  His reaction was anger and frustration because, in his words, he had just been informed by the administrators that they maintained their objective of seeking to sell Woolworths as a going concern, yet he was now discovering, by way of an item on the national news, that the administrators were, as he saw it, in fact seeking to sell off chunks of the business.

 

(15)         In the interests of readability, and in order to minimise avoidable duplication, we have included some additional findings of fact elsewhere in this Decision.

 

Jurisdiction

 

25.           As a result of institutional arrangements which had been agreed between the claimant and the respondent, there was never any prospect of any consultation being carried out with the claimant in Northern Ireland pursuant to the Article 216 duty.  (Under those agreed arrangements, the consultation framework between USDAW and Woolworths envisaged that the main interactions between the union and the employer would take place in Great Britain).

 

26.           In our view, Article 216 envisages consultation being carried out within the borders of Northern Ireland.  However, it seems to us to be clear that the Article 216 obligations could be satisfied by adequate consultation, regardless of where that consultation took place.  (So, if all the consultation which takes place everywhere is not adequate to meet the requirements of Article 216, there will be a failure to comply with the requirements of Article 216; but if consultation takes place in Great Britain, in relation to Northern Ireland redundancies, and if that consultation would have been adequate if it had been carried out in Northern Ireland, then it will also be adequate even if it is wholly conducted within Great Britain).

 

27.           Accordingly, the tribunal is not deprived of jurisdiction merely because the claimant and the respondent had envisaged that any consultation between them would have been carried out only within Great Britain.

 

Special circumstances

 

28.           We accept that, because of the financial pressures on Woolworths, it was not practicable for Woolworths (though the administrators) to begin consultation earlier than the date of the administration order.

 

29.           As Mr Fee reminded us, insolvency per se is not a special circumstance.  (See E/2706 of Harvey).

 

30.           In any event, even if there are special circumstances, the employer is not necessarily excused his duty to consult altogether.  In that situation, instead, he must do as much towards full compliance as is reasonably practicable in the circumstances.  It is only if he can prove both elements – both that there were special circumstances and that he did his reasonable best in those special circumstances – that there is a defence for him.  (E/2712 of Harvey).

 

31.           We accept that, in the particular circumstances of this case, it was not practicable to allow the redundancy consultation period to last beyond the end of 2008.  Therefore, in those circumstances, the overall duration of the consultation process is not a basis upon which a finding of Article 217 liability could properly be made against the respondent.

 

32.           However, we see nothing about the circumstances of this case which provides an adequate basis for the proposition that the administrators could not practicably engage in a high quality consultation process with the claimant.

 

33.           In particular, although we accept the respondent’s argument that there was a need for confidentiality in the context of the plans which were being drawn up in respect of sales and closures, there was no reason why a consultation with a senior official with USDAW (such as Mr Gorle) could not have been carried out on the basis of a requirement of confidentiality.  (Such arrangements had been made successfully before, in the context of Mr Gorle’s long-term and constructive engagement with Woolworths, in his role as the most senior of the relevant full-time officials of USDAW who mainly dealt with Woolworths matters).

 

Adequate consultation?

 

34.           Article 216(6) of the 1996 Order provides that, for the purposes of the Article 216 consultation, the employer must disclose, in writing, to the appropriate representatives, all of the information which is listed at paragraph (6) of Article 216.  The listed information includes matters such as the reason for the employer’s redundancy proposals, the numbers and description of employees whom it is proposed to dismiss as redundant and the proposed method of selecting the employees who may be dismissed.  In our view, the respondent did fulfil the requirements of Article 216(6), by sending the letter of 17 December 2008.

 

35.           However, it must be borne in mind that Article 216 requires the employer to consult with the relevant authorised representatives “with a view to reaching agreement” with those representatives.  (See paragraph (4) of Article 216).  Although courts in the United Kingdom have never asserted that there is any duty (in that context) to negotiate, it is clear from the UK case law that the aim of the relevant consultative process is to achieve an agreed solution.  And, as Harvey points out, consultation with a view to achieving an agreed solution is difficult to distinguish from negotiations.  (Harvey, E/2608).

 

36.           Furthermore, the English cases stress the need for genuine consultation.  In the present context, “genuine” consultation means consultation which fulfils all of the following requirements:

 

(1)            There must be consultation when the relevant proposals are still at a formative stage.

 

(2)            The consultee must be provided with adequate information upon which to respond.

 

(3)            The consultee must be given adequate time in which to respond.

 

(4)            The consultor must engage in conscientious consideration of the response to consultation. 

 

All of those points are made at E/2609 of Harvey.

 

37.           Furthermore, an employer does not comply with the relevant provisions if, before he meets the appropriate representatives, he has already made up his mind. 

 

38.           Furthermore, in particular, he does not comply with the relevant consultation obligations merely by going through the motions of consultation.  (See E/2610).

 

39.           In our view, in the circumstances of this case, the administrators did not enter into any process of meaningful consultation with USDAW.  Instead, its communications with USDAW mainly took the form of announcements emanating from the administrators (as distinct from communications made as part of a genuine attempt at dialogue).  The administrators’ interactions with the claimant were of a formal and mechanistic nature.  The administrators were going through the motions, rather than engaging in a process of meaningful consultation.  In particular, we agree with the views expressed by Mr Gorle at paragraph 40 of his witness statement in these proceedings:

 

“… it was my general view that while [USDAW] were keen to present Woolworths and its staff in a positive light to attract potential buyers and to use any of its political and commercial resources to assist, this willingness to cooperate towards a common end whereby as many employees would remain in employment as possible, was not reciprocated by the Administrators.  It is firmly my view that the Administrators failed in their duty to enter into meaningful consultation with the Union and I believe that this represented both a breach of the relevant legislation but also a lost opportunity in terms of avoiding, reducing or mitigating the consequences of the redundancies which subsequently took place”.

 

40.           The meeting which the administrators convened on 16 December 2008, which the respondent regards as the centre-piece of the relevant consultation process, was used by the administrators mainly as a forum for making announcements to the consultees (as distinct from engaging in a genuine consultation process with the consultees).  In arriving at that conclusion, we have taken account in particular of the following matters:  (1) The administrators arranged for the meeting to be mainly conducted by way of conference call, in which there were between 50 and 60 people involved; that made it very difficult to get questions in and receive effective answers, and the administrators knew this, or should have known this.  (2) In essence, the meeting was scripted.  Mr Kahn, one of the administrator, read out a prepared statement.  The script essentially included an outline of the store closures which were to be in four tranches.  The announcement included the dates of the closures and the number of stores which would be affected.  There had been no meaningful dialogue with USDAW beforehand regarding the timing or phasing of the closures.  The tone and content of the announcements at the meeting were indicative of consultors who had already made up their minds.

 

41.           It is true that Mr Gorle did have a one-to-one dialogue with Ms Jane Harley of Deloitte (whose role was to act as an employee-relations person who would be responsible for maintaining the link between the administrators and the trade unions) immediately after the meeting of 16 December.  However, that dialogue took place at the behest of Mr Gorle (rather than at the invitation of Ms Harley or the administrators), and the focus of the dialogue was upon a relatively peripheral issue (which was whether individual store managers would have the authority to close stores early if threatening situations arose in those stores).

 

42.           Against that background, and for those reasons, we are satisfied that there was a failure on the part of the respondent, in connection with the 2008/2009 redundancies, to carry out, in relation to USDAW, the consultation duties which were imposed by Article 216 of the 1996 Order.

 

Remedies

 

43.           We consider it appropriate to make a protective award.

 

44.           For the purpose of making a protective award, we do not need to make a definitive determination in respect of the question of whether or not each individual of Northern Ireland Woolworths store constituted a separate establishment or whether, instead, the whole of Woolworths’ Northern Ireland retail operations constituted a single establishment.

 

45.           However, we are satisfied that each Woolworths store did constitute, separately, an establishment, and that the overall Woolworths retail operation in Northern Ireland cannot be considered as a single establishment (within the context of the relevant legislative provisions).  In particular, we note that each Woolworth store could properly be regarded as constituting the unit to which that store’s employees were assigned to carry out their duties.  (See Harvey E/2532).

 

46.           The respondent had 19 stores in Northern Ireland.  Eighteen of those 19 stores employed more than 20 and less than 100 employees.  The nineteenth store had over 100 employees.

 

47.           However, the duration of a protective award, in the context of any particular establishment, is not affected by the size of that establishment.  (See Harvey at E/2773-2783).

 

48.           In GMB v Susie Radin Ltd [2004] IRLR 400, important guidance was given as to the basis upon which the length of a protected period should be calculated.  In particular, in that case, the following guidance was given:

 

(1)            The purpose of a protective award is to provide a sanction for breach by the employer of the consultation obligations; it is not to compensate the employees for loss which they have suffered in consequence of that breach.

 

(2)            An employment tribunal has 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 merely technical to a complete failure to consult at all.

 

(4)            The deliberateness, or otherwise, of the failure may be relevant, as may be the availability, or unavailability, of legal advice about the consultation obligations.

 

(5)            A proper approach in a case where there has been no consultation is to start with the maximum period (90 days) and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the tribunal considers to be appropriate.

 

(6)            Because the focus is on the seriousness of the employer’s default, it is no excuse or defence that the employees in fact suffered no loss.  (On this point, see Harvey E/2790).

 

49.           Having considered those principles, we have decided that the protected period should be a period of 60 days.

 

50.           In arriving at that conclusion, we have taken account, in particular, of the following determinations. 

 

(1)            This is not a situation in which there was no consultation whatsoever.  It is however a situation in which the consultation was perfunctory, and in which there was no real effort on the part of the administrators to meaningfully engage with USDAW.

 

(2)             In particular, we take account of the fact that the meeting on 16 December did take place, and we also take account of the fact that the manner in which it was set up and conducted was one which tended to obstruct, rather than to facilitate, meaningful dialogue and interaction.

 

(3)            The administrators had high quality human resources and legal advice available to them.

 

(4)            The administrators’ failures went to the heart of the consultation obligations, as distinct from merely involving technical or formal process defects.

 

(5)      In this particular context, it is worth remembering that the consultation duty incorporates an obligation to consult the appropriate representatives about ways of mitigating the consequences of the contemplated redundancy dismissals.

 

51.           The claimants have provided us with details of the dates on which the various Northern Ireland Woolworths’ stores closed.

 

52.           Having considered that information, we have concluded that, in relation to each of the stores, it is appropriate to regard the protected period as beginning on                               1 January 2009.  In each instance, the protected period is of 60 days duration.

 

 

 

Chairman:

 

 

Date and place of hearing:         18 January 2010, Belfast.

 

 

Date decision recorded in register and issued to parties: