United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 705_94_1411

Appeal No. EAT/705/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 14 November 1995

HIS HONOUR JUDGE H J BYRT QC

MRS J M MATTHIAS

MRS M T PROSSER

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(1) MR T DAVIES

(2) MR J NOBLE          APPELLANTS

LEC REFRIGERATION PLC          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR GARY MORTON

(Of Counsel)

Mrs J Armstead

Citizens Advice Bureau

Town Hall

Clarence Road

Bognor Regis

West Sussex

PO21 1LD

For the Respondents MR MICHAEL KOLANKO

(of Counsel)

Mr Michael Davey

Messrs Chamberlain Martin & Spurgeon

Solicitors

42 Sudley Road

Bognor Regis

West Sussex

PO21 1ES


 


JUDGE BYRT QC: This is an appeal from the decision of the Industrial Tribunal sitting at Southampton on 13 and 14 April 1994, when they unanimously decided the Appellants, Mr Noble and Mr Davies, had been fairly dismissed.

It was not challenged, and no one sought to do so here either, that the Appellants had been dismissed for redundancy and the issue then, as now, is to whether the dismissal had been fair.

The facts as found by the Tribunal below are as follows. The Respondents had a factory site at Bognor Regis which consisted of two plants; one made refrigerators and the other compressor units to be fitted into those refrigerators.

In 1992/93 problems starting accumulating for the company. There was the impact of the recession. There was also the international regulations which were coming through in relation to the use of CFC gas and it was thought by the company that they could not afford to re-design their compressor units in order to comply with the International Regulations and further, that it would in fact be cheaper for them to buy these ready made.

In addition to that, on 26 March 1993, the company trading figures were to be published and it was anticipated that these would be showing a sharp fall in profits which would argue a need to reduce overheads. Indeed, the company earlier in that year made the decision that they would have to substantially reduce overheads; that they would have to update their manufacturing techniques and further, that they would have to (for the reasons I have already indicated) close the compressor plant.

At the factory there was approximately 1280 people employed in all and, as a result of the measures they decided had to be taken in hand, some 360 would have to be made redundant, primarily in the Engineering Department.

Mr Betts, who was the engineering director, gave evidence before the Tribunal for the company and outlined just how sensitive an issue these redundancies were seen to be. There would, of course, be the traumatic impact on the staff whose jobs would be lost. There was the impact on the local community, Bognor Regis, a town consisting of some 65,000 people amongst whom the staff lived and, of course, there were all the trades who benefited from the earnings of the people who worked at the factory. In addition, as any company would, they had "to look over their shoulders" at the reactions and responses of their financial backers and shareholders.

In early 1993 rumours began to circulate. The directors of the company were mindful of the impact that any decision they made about closing down the compressor plant would have on their competitors and trade suppliers too. Their great intent, as they approached the fateful date, was to take measures which would secure and enhance confidence in their commercial viability.

Faced with this problem, the company decided that the best solution to cope with this delicate situation would be to make one announcement only, of the closures of the plant and the redundancies. At the same time it should set out the details precisely of where the redundancies would fall and upon whom.

The company employees, approximately 100 of them belonged to a trade union, the AEEU, the recognised trade union with whom the company negotiated. There was another trade union whose membership was in fact much smaller in number. This was the MSF. It was to that union that the two Appellants in this case, Mr Noble and Mr Davies, belong.

The AEEU heard of these rumours in late February, early March and, as a result, sought a meeting with the management of the company in order to find out just what was going on. The meeting was held on 2 March when they were told that there would be some redundancies, but the company did not tell them when the redundancies would be made, nor how many of them there would be. However, at that meeting they assured the union that there would be "no bumping" in the selection of people for redundancy.

Having regard to the arguments which have been advanced on behalf of the Appellants by Mr Morton we think it is not without significance that the company did not appear to have recognised MSF as a recognised trade union. As a result, they did not call upon them to attend the meeting on 2 March, together with the other trade union, the AEEU. Although Mr Noble made enquiries of the company as to whether there was any foundation for the rumours that there were going to be substantial redundancies, he says he was told that he need not concern himself about that or worry about it. As a result, his concerns were largely assuaged and he sought no further meeting with the company.

The company decided to make its announcement was decided on 25 March, and on that date they announced there would be 360 redundancies.

The individual staff were told later during the afternoon, and each member of the staff was given 92 days' notice. As I have indicated earlier, there was probably some connected thinking between the selection of 25 March for the announcement and the fact that it was going to be on 26 March that the trade figures would be published. Of course shareholders and financial backers would want to know, in view of the fall in profits, that the company had the problem in hand. To see this contraction in overheads, would have been just the sort of step needed to enhance their confidence.

Of the two Appellants in this case; Mr Noble was notified of his redundancy by the engineering director, Mr Betts. He was a Grade 1 factory supervisor, who had been in service with the company for something like 29 years. He was a joint plant engineer of the Plant Maintenance Department, together with a man called Mr Suter, who as I understand it, was of equal rank.

Mr Noble's redundancy was not directly associated with the closure of the compressor plant, but was more directly due to the "knock-on effect" of the closure of that plant and the need to reduce overheads.

The selection of Mr Noble for redundancy was a difficult decision for the company and the way they went about it was as follows. It was decided at board level that, either he or Mr Suter would have to go. There was no longer room for two plant engineers. A panel was arranged comprising the chairman of the company, the technical director, and the engineering director. The three of them considered this a thorny problem. Both Mr Noble and Mr Suter were competent managers and administrators. They both had similar ranges of skills. The only apparent difference between them was that Mr Suter had 36 years of service as opposed to Mr Noble who had 29. At the end of their difficult deliberations, they came to the conclusion that perhaps the fairest way to make the selection for redundancy was to apply this difference in service length as the deciding factor. As a result, Mr Noble, the employee with the shorter service with the company, was selected for redundancy.

The Tribunal's findings then go on to state that the Respondents considered relocating Mr Noble in the Engineering Department, but they came to the conclusion that if they were serious in their intent to reduce their overheads, there was no place for him in that department and so he went.

So far as Mr Davies is concerned; he had served 34 years with the company and during that time had acquired extensive knowledge of compressor manufacturing and had gained valuable experience in checking quality control. He had served a time abroad and there was an understanding that, when he returned, there would be a job for him. In 1992, he was made a stores supervisor under another manager called Bill Hudson. The Respondents considered the position of Mr Davies and earmarked him as a possible candidate for redundancy. They considered the possibility of relocating him but, unfortunately for him, decided there was no alternative job available.

Before the Industrial Tribunal, Mr Davies contended that there were two other jobs for which he was qualified. One was that of another man called Mr Trott, who had very long service, and was over the retirement age. So far as the Respondents were concerned, the misfortune was that a subordinate had already been selected to take over his position and for a period of time had, in fact, been trained to do just that. They took the view that if Mr Davies were to take over from Mr Trott, it would be in violation of the arrangements they had come to with the AEEU that there would be "no bumping"; he would, in fact, be ousting the other man's employment in order to secure his new job. He also in fact suggested that he should take over from Bill Hudson, but the company decided that Mr Hudson had been in stores for 15 years whereas Mr Davies had only been there two and again, in fairness, they thought it only right to retain Mr Hudson in his position.

The complaints which was made by both the Appellants was that, prior to 25 March, there had been no consultation with either of them as individuals, or with the union, the MSF, to which they belong; nor was there any effective consultation after that date either. They noted there had been a meeting on 2 March with the AEEU and complained that their union had not been included in those arrangements. The probable explanation is that the company either overlooked the claims of the MSF to attend such a meeting or, alternatively, did not recognise them as a recognised trade union for the purposes of the Trade Union & Labour Relations Act. However it is now conceded at this hearing by Mr Kolanko, for the Respondents, that the MSF would qualify as a recognised trade union and further that there had been no consultation with them. The point has to be made that whilst the AEEU was a recognised trade union, they seemed to have enjoyed no priority or pre-eminence in the consultation process over and above the MSF save for the occasion of 2 March. Effectively neither had been consulted.

A point made by Mr Morton is that there was no finding by the Tribunal as to whether the MSF was a recognised union, and as a result they had not posed to themselves the question as to whether Section 188 of the Trade Union & Labour Relations Act applied. This is a section which contains a mandatory provision whereby the company should have consulted with that union. It is recognised however, by Mr Morton, that their failure to consult, in accordance with the provision of that section, does not automatically therefore mean that the dismissal of Mr Noble and Mr Davies had been unfair, but it was a factor that the Tribunal could and should have taken into account.

Apart from that point of law (as I understand it) Mr Morton accepts that the Industrial Tribunal directed itself on the law relating to consultation appropriately. The reasons of the Industrial Tribunal make plain that they recognised how important the principle of consultation was, that it was an established principle of management that there should, in the circumstances of redundancies, be a full consultation with all the parties concerned, and they went on to say just how important a principle it was when they cautioned that any employer who disregarded the established principle did so at their peril, and by so stating indicated that the Tribunal scrutinised with the greatest care any circumstances in which the employer decided not to engage in consultation.

The Tribunal then went on to say that there were exceptional, albeit very rare cases, where it was perfectly proper for the company not to consult. They referred to the case of Polkey v A E Dayton Services Ltd and reminded themselves that it was appropriate not to do so where, in fact, consultation would be a futile process.

Pro tanto the Appellants do not dispute, that the Tribunal directed themselves properly on the law. The Tribunal then went on to consider the facts I have outlined and considered, with care, the circumstances advanced by the company for not engaging in the usual consultation process. They took note that the company was very concerned about the impact that losing 25 per cent of their workforce would have on a whole range of outside concerns including the local community, their competitors, trade suppliers and so on. They took into account the company's decision (one might say bold decision) that the best way to cope with the possible disruption and trauma their announcement might cause, would be to make the one announcement on 25 March. Having considered those circumstances, the Tribunal came to a finding, which is one of fact, that whilst other employers might have taken a different course and engaged in a process of consultation, it was not unreasonable for these employers, in the circumstances, to have proceeded in the way that they did without consultation.

We are satisfied that the Tribunal directed itself appropriately and correctly on the issues related to consultation. We are satisfied their omission to accord the MSF recognised status is of no import because the Tribunal would have had to consider the same issues in relation to consultation in relation to the AEEU. Having considered the rights of the AEEU, the Company had come to the conclusion that they should proceed without consultation with them. Had the MSF at the time been accorded similar status, we think the Company would have decided no differently with regard to them had they deliberately and particularly directed their mind to it.

So on the law we find that the Tribunal directed itself correctly and thereafter the issue becomes (as we see it) one of fact. Was the decision that the employers had acted reasonably, in all the circumstances of the case, one which a reasonable Tribunal could come to? Mr Morton, in his frank and careful argument, has not sought to argue that the Tribunal came to a perverse decision. We think there is no ground for holding that they did.

Accordingly, we see no reason for this Appellant Tribunal to disturb the finding of the original Tribunal, and in those circumstances, the appeal must be dismissed.