United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 828_93_1705

Appeal No. EAT/828/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 17 May 1994

Judgment delivered on 25 July 1994

Before

HIS HONOUR JUDGE J HULL QC

MRS P TURNER OBE

MISS D WHITTINGHAM

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MAKRO SELF SERVICE WHOLESALERS LTD          APPELLANTS

USDAW          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR BOWERS

(OF COUNSEL)

Dibb Lupton & Broomhead

Windsor House

Temple Row

Birmingham B2 5LF

For the Respondents MR D BROWN

(OF COUNSEL)

Ms Kate O'Neill

Legal Officer

USDAW

188 Wilmslow Road

Fallowfield

Manchester M14 6LJ


 


JUDGE HULL QC: This is an appeal by Makro Self Service Wholesalers Ltd ("MAKRO") against the decision of the Industrial Tribunal sitting at Bristol on 11 August 1993 under the Chairmanship of Mr M E Woods. The Respondents to the appeal are the Union of Shop Distributive & Allied Workers ("USDAW"). USDAW complained to the Industrial Tribunal that MAKRO had failed to notify and consult it in respect of the redundancy of a Mr Robbins, contrary to Section 99 of the Employment Protection Act 1975 (now section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992).

Section 188 provides:-

(1) An employer proposing to dismiss as redundant an employee of a description in respect of which an independent trade union is recognised by him shall consult representatives of the union about the dismissal in accordance with this section.

(2) The consultation must begin at the earliest opportunity...

(4) For the purposes of the consultation the employer shall disclose in writing to the trade union representatives -

(a) the reasons for his proposals

(b the numbers and descriptions of employees whom it is proposed to dismiss as redundant...

(5) That information shall be delivered to the trade union representatives..."

It is common ground that the statutory consultation did not take place; MAKRO averred that Mr Robbins was not:

"an employee of a description in respect of which [USDAW were] recognised by them"

and that, accordingly, the duty under section 188(1) did not arise. MAKRO contended that Mr Robbins, as a member of their management, was not included in the recognition agreement with USDAW.

Recognition under the Act of 1992 is a concept which is both technical and important. It confers a large number of rights on the Union: there is a list in Harvey's Industrial Relations & Employment Law at paragraph 904.01.

Section 178(3) of the Trade Union & Labour Relations (Consolidation) Act 1992 provides:

"In this Act "recognition", in relation to a trade union, means the recognition of the union by an employer, or two or more associated employers, to any extent, for the purpose of collective bargaining; and "recognised" and other related expressions shall be construed accordingly."

Section 178(1) defines collective bargaining:

"In this Act "collective agreement" means any agreement or arrangement made by or on behalf of one or more trade unions and one or more employers or employers' associations and relating to one or more of the matters specified below; and "collective bargaining" means negotiations relating to or connected with one or more of those matters."

Section 178(2) lists the matters referred to in subsection (1): they include terms and conditions of employment, matters of discipline, and a worker's membership or non-membership of a trade union.

Although the list is comprehensive, it has to be noted that the Act refers to "collective bargaining" or "negotiations"; the mere fact that an employer enjoins its members to belong to a trade union or trade unions, or allows a representative of the union or unions to represent employees at, for example, disciplinary hearings, will not be evidence of "recognition", see USDAW v Sketchley Ltd [1981] ICR 644, to which we refer below. In Regina v Central Arbitration Committee ex parte BTP Tioxide Ltd [1981] ICR 843, Forbes J elucidated the matter further; at page 857E-F he said:

"From these provisions I think one can deduce that the Act contemplates that there may be, in addition to collective bargaining which entitles a union to information, (1) bargaining between employers and union which does not amount to collective bargaining because it does not relate to matters referred to in section 29 of the Act of 1974 [now section 178 of the Act of 1992]; (2) dealings, to use a neutral term, between employers and unions which do not amount to collective bargaining because they cannot be properly called negotiations; and (3) collective bargaining which does not attract the right to information because it is not about matters in respect of which the union is recognised for collective bargaining."

The Industrial Tribunal, in its decision promulgated on 1 September 1993, made the following findings of fact:

"2 The respondents and the Union first entered into a Recognition and Procedural Agreement as long ago as 1972. That agreement has, from time to time, been amended by agreement. The text of that agreement is set out in the handbook which is given to all of the respondent's employees including those holding management positions such as were held by Mr Robbins. The Union have formed a specialised section which is called "Supervisory, Administrative and Technical Association" and in short is known as "S.A.T.A." to deal with the affairs of administrative, managerial, supervisory or technical grades. It is not a separate Union. It is part and parcel of the complainant Union.

3 About 10 years ago the respondents agreed with the Union that there should be inserted in the staff handbook a clause in the following terms:

"Membership

Employees have the right to choose whether or not to belong to a Trade Union and to seek to hold office in the Union. If an employee is a member of a Trade Union, he may take part in its activities within normal working hours only by agreement with management. If employees wish to join a Union, they are recommended to join U.S.D.A.W... or if appropriate, S.A.T.A., the only Union with which the Company has a Recognition and Procedure Agreement".

The last amendment to this agreement was made between the respondent and the Union in a document signed by the respondent's personnel director on the 17 December 1992 and by the national officer of the Union on 7 January 1993.

4. Clause 1 of the agreement reads as follows:

"Recognition

(a) The Company and the Union accept the need for sound industrial relations to assist in the efficient working of the business. The Company recognise the Union of Shop Distributive and Allied Workers as the appropriate and only Union to negotiate on behalf of and/or to represent the Company's staff. The Union acknowledges its role in supporting the Company in its aim towards efficiency and profitability.

(b) This agreement applies to all permanent staff employed by the Company. Negotiations on pay and conditions take place in respect of staff in salary grades A-D inclusive."

The respondents contend that the words "staff" and "permanent staff" used in this clause of the agreement do not include employees holding management positions. This is because the respondents in dealing with their employees used the word "staff" in relation only to those employees who hold positions below management status. We are satisfied that this is, in fact, the case and that in using these words in the Recognition and Procedural Agreement, both the respondents and the Union would have understood this to be the position. This is borne out of the fact that the Union (as opposed to its S.A.T.A. Branch) would represent employees holding "staff" grade positions and that S.A.T.A. would represent employees in the management grades. The words "staff" and "permanent staff" appear throughout the text of the Recognition and Procedure Agreement and its addenda. Therefore it appears that those documents were drafted on the basis that they applied to employees below status management."

The Industrial Tribunal then referred to correspondence and conversations between MAKRO and the Union and certain contentions made by MAKRO and continued:

"7 Notwithstanding the fact that the wording of the text of the Recognition and Procedure Agreement is such that it would appear to relate only to staff in grades A to D and to the fact that the Union had not taken up matters on behalf of management grade employees, we find that the Union, through its S.A.T.A. Branch were the recognised Union by reason of the clause which was inserted in the staff handbook some 10 years ago and which is referred to in paragraph 3 of these reasons. That clause contains the following important passage:

"If employees wish to join a Union, they are recommended to join U.S.D.A.W....or if appropriate S.A.T.A., the only Union with which the Company has a Recognition and Procedure Agreement".

It is also relevant in our view that the people covered by it are not described as "staff" but as "employees". Therefore it is clear that it is then intended that the Union should be recognised for a wider category of employees. The reference to S.A.T.A. must of necessity mean that the Union were also to be recognised for management employees such as Mr Robbins. Clearly the parties should have prepared a completely newly worded Recognition and Procedure Agreement, but as they did not do so, we can only conclude that they intended that the Recognition and Procedure Agreement that applied to "staff" would also, in so far as its provisions could be so applied, apply to managers. The fact that the clause referred to in paragraph 3 above, has continued to be inserted in the Staff Handbook given to all employees including management, shows that it has not subsequently been revoked and is still, in effect, despite its non-usage and the misunderstandings about it. We therefore find that the respondents were under an obligation to consult with the Union (through its S.A.T.A. Branch) when proposing to dismiss Mr Robbins from their employment by reason of redundancy. We therefore make a declaration to that effect."

Mr Bowers, for MAKRO, submitted that there was no evidence on which the Industrial Tribunal could base a finding (paragraph 3 above) that MAKRO agreed with USDAW that the "membership" paragraph should be inserted in the staff handbook. He pointed out that the handbook (p.47 of the EAT bundle onwards) is described as the property of MAKRO and forms part of the conditions of service of the staff (p.39 and 52). It is, he said, MAKRO's own contract which is in no sense agreed with USDAW, apart from the fact that the recognition and procedure agreement is set out (p.82). Miss Greenwood, personnel controller for MAKRO, gave evidence that this paragraph (she called it a clause) was put into the handbook following discussion between the personnel director and the national officer of USDAW, and it had been there for at least 10 years: originally it just referred to USDAW but presently, when MAKRO said that management could join S.A.T.A., it was altered to its present form.

S.A.T.A. has its own constitution and by-laws (p.44), but it has no separate existence in law: paragraph 5 of its constitution states that it is to operate as a specialised section of USDAW, to be governed in all respects by the General Rules of the Union.

In National Union of Taylors & Garment Workers v Charles Ingram & Company Ltd [1977] ICR 530 the Employment Appeal Tribunal, presided over by Phillips J., made the following observations at p.533:

"Recognition" plainly, we think, implies agreement - which, of course, involves consent. That is to say, it is a mutual process by which the employers recognise the union, which obviously agrees to be recognised and it may come about in a number of different ways. There may be a written agreement that the union should be recognised. There may be an express agreement not in writing. Or, as we think, it is sufficient if neither of those exists but the established facts are such that it can be said of them that they are clear and unequivocal and give rise to the clear inference that the employers have recognised the union. This will normally involve conduct over a period of time.

Of course, the longer that state of facts has existed, the easier it is in any given case to reach a conclusion that a proper interpretation of them inevitably leads to the conclusion that the employers have recognised the union. Against that test, it has not been suggested here that there is any formal document by which the employers recognised the union. It is necessary to look at the facts. As we said, they seem to us to lead inescapably to the conclusion that these employers treated this union at the material time as being recognised for the purposes in question."

In that case the existence of an agreement, there being of course no formal document, was a question of fact; the existence or otherwise of "recognition" was likewise treated as a question of fact, together with the inferences which should be drawn from those facts.

In National Union of Gold, Silver & Allied Trades v Albury Brothers Ltd [1978] ICR 62, the Employment Appeal Tribunal, again presided over by Phillips J., said at p.65E-G:

"First, the question of recognition is a mixed question of fact and law. Secondly, recognition requires mutuality, that is to say that the employer acknowledges the role of the union for the relevant purposes and the union assents to that acknowledgment. Thirdly, such a process requires agreement, which may be express or implied. Fourthly, if it is said to be implied, the acts relied upon must be clear and unequivocal, and (usually) involve a course of conduct over a period of time. Fifthly, the words "to any extent" in section 11(2) ["see now section 178(3) of the Act of 1992"] do not refer to the strength or conviction of the recognition but to the subject or areas to which it relates. In other words there may be partial recognition; that is, recognition in certain respects but not in others."

That decision was upheld in the Court of Appeal at [1979] ICR 84.

In each of these cases there was no formal agreement. Where there is a formal agreement, it appears to us that its construction must be a question of law. In USDAW v Sketchley Ltd [1981] ICR 644, the Employment Appeal Tribunal, presided over by Browne-Wilkinson J., referred at p.650 to the decision in NUGSAT v Albury Brothers Ltd and continued at p.650G:

"The authorities also establish that it is a matter of substantial importance to the parties whether or not statutory recognition has occurred. It is for that reason that recognition is not lightly to be inferred from the actions of the parties. But we cannot accept that the industrial tribunal was right in treating the matter as a question of burden of proof where, as in the present case, there is an express written agreement. Where there is an express written agreement, there is no doubt that the parties have reached an agreement: the only area of doubt is as to what they have agreed. That question is to be answered by giving the agreement its true meaning in the context in which it was entered into. We turn then to consider the three points mentioned above.

(a) The agreement of May 8, 1978.

We agree with the industrial tribunal that this agreement did not afford statutory recognition to the union. We will assume in favour of the union that matters of representation in grievance procedures and the appointment of shop stewards are matters of a kind referred to in section 29(1) of the Act of 1974. ["See now section 178(2) of the Act of 1992"]. The crucial question in our view is whether the employers were recognising the union "for the purposes of negotiation relating to or connected with" such matters. The statutory definition requires the recognition to be for that purpose and none other. In our view, the employers were affording to the union limited rights to represent their members in grievance procedures, together with facilities for appointing shop stewards and collecting union dues. As the heading to the agreement states, it is an agreement to provide "recognition for representation," not recognition for negotiation purposes. This distinction is again emphasised by clause (viii) of the agreement which expressly states that the agreement does not confer "recognition ... for negotiation of terms and conditions".

Mr Hand, for the union, submitted that the distinction between recognition for representational purposes on the one hand and recognition for negotiation purposes on the other is artificial and unworkable. We cannot agree. First, to our minds, there is a clear distinction between the role of a person who, under existing grievance procedures, is entitled to make representations on behalf of an individual on the one hand and the role of a person who is entitled to negotiate over what the procedures themselves should be, on the other hand. Secondly, those of us who have experience in industrial relations well know that the progress towards full recognition of a union by an employer is often a slow and careful one. The first stage is often to concede to the union the right to represent its own members. Thereafter, matters may proceed further but normally only in carefully negotiated steps. To treat the first step (a representation agreement) as tantamount to recognition for negotiation purposes would be contrary to sound industrial relations practice. Thirdly, the dangers of so doing are great. Some employers are faced with a multiplicity of unions, each claiming to represent sections of the work force. All have representation rights for their individual members under grievance procedures, a practice which is obviously fair. However, only certain on the unions will be accorded full recognition and have negotiating rights. The employer's decision to recognise a union for negotiating purposes is carefully made and, once given, is equally carefully guarded by both sides. Quite often the recognised unions in an undertaking come together to engage in joint negotiations with the employer. What would be the cost to orderly industrial relations if every union which has obtained the right to represent its own members thereby became recognised for the purposes of section 99 and other purposes? For these reasons we do not consider that the agreement of May 8, 1978, conferred statutory recognition to negotiate on the union."

We were also referred to the most helpful summary of certain of the rules of contract law material to the construction of a contract, and the relevance or irrelevance of the conduct of the parties, made by Gibson LJ in the Court of Appeal's decision in Hooper v British Railways Board [1988] IRLR 517 at p.525.

We have come to the conclusion that there was indeed no evidence of any agreement between USDAW and MAKRO that the membership paragraph should be inserted in the staff handbook. No doubt USDAW was entirely content that it should be inserted, and no doubt it was the subject of some conversations between MAKRO and USDAW; but that is a long way from saying that this paragraph is inserted as a result of an "agreement" and can, accordingly, be referred to as an addition to the Recognition and Procedure agreement, modifying or adding to its terms or serving as a guide to its construction.

The membership paragraph is at page 82 of the bundle and the Recognition and Procedure agreement as it was in September 1990 begins at that page (all of this of course being a copy of part of the staff handbook). The Recognition and Procedure agreement states in terms that the Company recognises USDAW as the appropriate and only union to negotiate on behalf of and/or represent MAKRO's staff, and that "This agreement applies to all permanent staff employed by the Company. Negotiations on pay and conditions take place in respect of staff in salary grades A-D inclusive". Under clause 7 (p.85) the Recognition and Procedure agreement deals with "collective grievance procedure":

"There will be some instances, fortunately rare, where complaints and grievances not of a disciplinary nature need to be resolved. These are matters pertaining to questions of policy, or decisions made by management, which impinge upon employees as a group rather than as individuals. In these cases, in the interest of good industrial relations, the following procedure will apply:-

(a) A member of staff being a member of USDAW will raise the matter with the shop steward who, in consultation with the senior shop steward, will attempt to resolve the matter at a meeting with the store general manager.

(b) If no satisfactory solution is achieved, the senior shop steward will report it to the union area organiser and the store manager will report it to the national personnel department..."

At first impression it would appear that this agreement might well apply to members of management. Thus the word "staff" is obviously wide enough, as a matter of simple English, to cover managers, and indeed very senior managers. An army commander might have one or more major-generals on his "staff". But the Industrial Tribunal expressly found that both parties to the agreement used "staff" as referring only to those employees who held positions below management status. On that basis, it might be argued that clause 1(b) was making a distinction between "permanent staff" (perhaps including management) and "staff in salary grades A-D inclusive": but that, the Industrial Tribunal found, would have been a distinction without a difference. "Staff" and "Permanent Staff" both meant employees not holding management positions. All staff were (apparently) arranged in grades A-D, and no members of management - certainly not Mr Robbins - were in those grades. Then it might be suggested that the word "employees" in clause 7 meant a class wider than "staff". Indeed the word "employees" is used in various places in the handbook in a way which suggests that it may possibly be referring to staff and other employees; but it is clear from what follows that clause 7 is in fact conferring rights only on USDAW in respect of "staff".

It is clear from the full reasons that the Industrial Tribunal was relying entirely on the membership paragraph (at p.82) to hold that the Recognition and Procedure agreement had, for a considerable time, related to management grade employees as well as staff. For the reasons which we have set out above, we consider that this is an entirely illegitimate method of construing the Recognition and Procedure agreement. Indeed, the Industrial Tribunal themselves seem to have felt the force of this, when they suggested that a newly worded Recognition and Procedure agreement should be prepared; this is treating the membership clause as an agreement to vary the Recognition and Procedure agreement or, perhaps, as some sort of ground for rectification.

We accept Mr Bowers' submission that this approach to the membership clause shows that the Industrial Tribunal had overlooked the very technical nature of "recognition" as defined by the Act, and indeed the authorities to which we have referred. The suggestion by an employer that employees should join a trade union cannot possibly amount by itself to recognition of the union, even if that union is already recognised for certain purposes in respect of other employees. The employer may have a general belief in trade unionism: he may hope that his employees will take a full part in union activities and will influence the union favourably towards the employer: he may hope that the union will represent the employees in respect of disciplinary hearings and other matters or even in "bargaining which does not amount to collective bargaining" or "collective bargaining which... is not about matters in respect of which the union is recognised for collective bargaining" to quote from Forbes J in the Tioxide case at p.857EF. Perhaps more likely still, the employer may hope that membership of a union which he knows and trusts will prevent his employees from joining other unions which he suspects will be less well disposed.

We therefore hold that the Industrial Tribunal misdirected itself and arrived at a conclusion which cannot rationally be justified. The passage:

"It is also relevant in our view that the people covered by it [the membership paragraph] are not described as "staff" but as "employees". Therefore it is clear that it is then intended that the Union should be recognised for a wider category of employees. The reference to S.A.T.A. must of necessity mean that the Union were also to be recognised for management employees such as Mr Robbins."

seems to us to contain two non sequiturs in the second and third sentences respectively. We think it significant, as Mr Bowers submitted and Mr Brown, for USDAW, admitted, that the Industrial Tribunal made no express findings that MAKRO recognised S.A.T.A., whether as part of USDAW or at all, for the purpose of negotiations relating to or connected with any of the matters set out in section 178(2) of the Act of 1992.

There are references in the full reasons to correspondence and discussions between the parties: and the evidence before the Industrial Tribunal, including extracts from minutes of various meetings, is with our papers. Those matters founded various comments by Counsel, in the course of their submissions, but we do not think that they can affect our conclusions.

Mr Brown, who put forward every reasonable argument to support the Industrial Tribunal's decision, put forward further matters with which the Industrial Tribunal does not deal in its decision at all. These submissions relate to the effect of European Law and Council Directive No 75/129. Mr Bowers objected to the making of these submissions: he referred to Kumchyk v Derby County Council [1978] ICR 1116 and Hellyer Bros Ltd v McLeod [1987] ICR 526, and said that Mr Brown was endeavouring to raise a new point.

Mr Brown put before us a statement by Mr Rowlands, Area Organiser with USDAW, who represented the union before the Industrial Tribunal. In that document Mr Rowlands states that he has no specialist legal expertise or training, but that he put before the Industrial Tribunal a bundle of documents prepared by the union's Legal Department, saying that he had been given arguments to present. He relied on the Chairman to "interpret European Law" because he (Mr Rowlands) had attended a seminar which the Tribunal Chairman had addressed, making clear his view that trade union representatives should rely on the Chairman for legal expertise. The bundle includes copies of Council Directive No 75/129, and of reports of Litster v Forth Dry Dock & Engineering Co Ltd [1989] IRLR 161.

We agreed, notwithstanding Mr Bowers' objection, to allow Mr Brown to address us on these further matters, although it might have been more correct to insist that the Industrial Tribunal should first be invited to review its decision: in the circumstances we have not of course had the benefit of the Industrial Tribunal's decision on this "new point".

Mr Brown first referred to the terms of Council Directive No 75/129, which is printed in Butterworth's Employment Law, 6th Edition at p.1118 to p.1122:

Article 2

1 Where an employer is contemplating collective redundancies, he shall begin consultations with the workers' representatives in good time with a view to reaching an agreement.

and

Article 1

(1) For the purposes of this Directive:

(a)...

(b) "workers' representatives" means the workers' representatives provided for by the laws or practices of the Member States."

Mr Brown submitted that the provisions of section 178 and section 188 of the Act of 1992 failed to comply with the Council Directive, in that the employer was not obliged to recognise any trade union whatever and accordingly, if a redundancy situation arose, it might well be that there would be no workers' representatives with whom the employer was obliged to confer. This submission has proved well-founded. It is vindicated by the decision of the European Court of Justice in its judgment of 8 June 1994 in Commission of the European Communities -v- United Kingdom, cases C-382/92 and C-383/92. Mr Brown said that in those circumstances we should adopt a purposive interpretation of section 188 and should add to sub-section (1), after the words "representatives of the union", the words "or other trade union representatives". When we asked Mr Brown to produce a new draft of section 178 and section 188 which would in fact bring about a result which fully complied with the directive, it became apparent that this would be no mean task and that it would certainly be beyond the capacity of Mr Brown or indeed the members of the Tribunal to redraft the statute extempore in the desired sense.

It appeared to us, in spite of all the matters which were urged upon us by Mr Brown, that there was no possible method of interpreting the Act of 1992 in a purposive manner so that it could comply with what Mr Brown submitted was the true meaning of Council Directive No 75/129 and that nothing less than comprehensive amendments to the statute, with very far reaching effects, would suffice. Having considered Litster v Forth Dry Dock & Engineering Co Ltd [1989] ICR 341, Duke v GEC Reliance Ltd [1988] ICR 339, 352, and Webb v EMO Air Cargo Ltd [1993] ICR 175 at 186/7, we are satisfied that we have no power whatever to amend a United Kingdom statute in this way, or to construe it in a manner which is tantamount to such amendment. Mr Bowers gave us a number of reasons why we should not do so but we do think, with respect, that we do not need to go through them. The failure of the United Kingdom to comply with Directive No 75/129 is a matter for Parliament and not for us.

Finally, Mr Brown submitted to us that we should make a reference to the European Court asking whether the Directive confers a right for the benefit of an individual affected by a failure to consult in accordance with its provisions, stating the nature of the right and asking whether the Act of 1992 is contrary to the Directive. In view of the fact that this proposed reference would appear to cover precisely the same ground as that considered in the decision of the European Court of Justice to which we have referred, such a reference would appear to be entirely otiose; we were referred to what was said about references in H P Bulmer Ltd and Another v J Bollinger SA [1974] 1 Ch 401 and we decline to make any such reference.

We propose, unless any further submission is made to us, not to remit this case to the Industrial Tribunal or to a different Industrial Tribunal but simply to declare that USDAW are not entitled to any relief in respect of the failure to notify and consult of which they complain in their application to the Industrial Tribunal dated 7 April 1993.