United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR G MILLAR (of Counsel) Messrs Lawford & Co Solicitors 102-104 Sheen Road Richmond Surrey TW9 1UF
For the Respondents	MR P GOULDING (of Counsel) Messrs Rowe & Maw Solicitors 20 Blackfriars Lane London EC4V 6HD


 


JUDGE PETER CLARK: This is an appeal by the Amalgamated Engineering & Electrical Union ["the Union"] against a decision of the Reading Industrial Tribunal sitting on 11th September 1996 not to make protective awards in respect of two successful applications by the Union that the respondent employer, Thorn (UK) Ltd ["Thorn"] had failed to consult with the Union at the earliest opportunity over two sets of redundancies, contrary to s.189(2) of the Trade Union and Labour Relations (Consolidation) Act 1992 ["the 1992 Act"]. Extended reasons for that remedies decision are dated 9th October 1996.

The Statutory Provisions

The following provisions of the 1992 Act are material:

"188 Duty of employer to consult trade union representatives

(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, and in any event-

(a) where the employer is proposing to dismiss as redundant 100 or more employees at one establishment within a period of 90 days or less, at least 90 days before the first of those dismissal takes effect;

(b) where the employer is proposing to dismiss as redundant at least 10 but less than 100 employees at one establishment within a period of 30 days or less, at least 30 days before the first of those dismissals takes effect.

...

(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,

(c) the total number of employee 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, and

(e) the proposed method carrying out the dismissal, 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 that in compliance with an obligation imposed by or by virtue of any enactment) to employees who may be dismissed].

....

(6) The consultation required by this section 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 trade union representatives.

189 Complaint by trade union and protective award

(1) Where an employer has dismissed as redundant, or is proposing to dismiss as redundant, one or more employees of a description in respect of which an independent trade union is recognised by him, and has not complied with the requirements of section 188, the union may present a complaint to an industrial tribunal on that ground.

(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 the requirement of section 188,

ordering the employer to pay remuneration for the protected period.

(4) The protected period-

(a) begins with the date of 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 in a case falling within section 188(2)(a), 30 days in a case falling within section 188(2)(b), or 28 days in any other case."

The Industrial Tribunal's First Decision

The original hearing before the same Industrial Tribunal lasted for eight days. In a decision promulgated on 28th June 1996 with full reasons ["the first decision"] the tribunal considered 3 Originating Application brought by the Union. It dismissed one application (Case No.14215/95) on the basis that Thorn had complied with the provisions of s.188 of the 1992 Act in respect of redundancies in the 'Homeserve' operation in January 1995.

As to the two successful applications the tribunal found:

(1) Case No. 10827/95

This related to redundancies in Thorn's Focus business. The tribunal held that consultation ought to have started on 20th January 1995, but did not begin until 8th February 1995. In the event 131 redundancies were declared on 11th March 1995. The tribunal treated those redundancies as having been at one establishment and accordingly the minimum consultation period under s.188(2) was 90 days.

(2) Case No. 14217/95

This complaint related to Homeserve redundancies on 13th March 1995 ["Homeserve/March"]. The tribunal found that consultation ought to have commenced on 20th January 1995. In fact it began on 7th February 1995. The tribunal held that each unit in Homeserve was a separate establishment, and thus the minimum consultation period was either 30 or 28 days, depending on whether the number of redundant employees at each unit was more or less than 10.

There was no appeal against the first decision by either party.

The Remedies Decision

Having made a declaration as to the two successful complaints the tribunal directed itself that it was for the union to demonstrate to the tribunal that a protective award should be made.

By reference to its earlier findings contained in the first decision, the tribunal summarised its findings material to the issue of whether or not a protective award should be made in paragraph 6 of the remedies reasons thus:

"6 The Tribunal found at paragraph 18 [of the first decision] that the respondents did not consult at the earliest opportunity as required at sub-section (2) in the case of two out of three sets of redundancies; hence those two applications have been found to succeed. However, once consultation has started, the respondents did progress matters with the Trade Union in both sets of dismissals. In the course of the resulting discussions, they covered every aspect that ought reasonably to be covered through such a consultation process. There were a number of meetings between the respondents' management and the Union Representatives. These offered the opportunity for a full and frank exchange of view between the parties which was diligently taken by the Union. Some concessions resulted and, in respect of each set of redundancies, the parties reached an accommodation which was recorded in a joint statement (in relation to focus at R1 pages 199 to 207) and as to Homeserve/March R1 pages 126 to 128)."

It further directed itself in accordance with the Employment Appeal Tribunal decision in Spillers French Holdings v USDAW [1980] ICR 31, that the purpose of a protective award was to compensate for the employer's failure to consult, and that based on the decision of the Employment Appeal Tribunal in TGWU v Gainsborough Distributors (UK) Ltd [1979] IRLR 460, it was open to the tribunal conclude that a nil award was appropriate. In the light of its findings set out at paragraph 6 above it concluded at paragraph 10:

"10 In the present case, having regard to the scale of the closures, the thoroughness of the consultation process in both sets of circumstances, and the provisions of Section 189(4)(b) we conclude that it is just and equitable to make no protective awards in this case."

The Appeal

The first point taken in this appeal by Mr Millar on behalf of the Union is that the tribunal erred in law in placing the onus of proof on the Union to demonstrate that a protective award should be made.

He submits that under s.189 there is no onus on either party to show that a protective award should or should not be made. If that is correct, then the tribunal misdirected itself in placing the onus of proof on the Union and its conclusion that no award was appropriate cannot stand.

Mr Goulding responds that the tribunal was correct in placing the burden on the Union. He relies upon the decision of the Scottish Employment Appeal Tribunal in MSF v GEC Ferranti (Defence Systems) Ltd (No.2) [1994] IRLR 113. In that case the Employment Appeal Tribunal upheld an appeal by the Union against a decision of an Industrial Tribunal dismissing its complaint that the employer had failed to provide the information required under s.99(5) of the Employment Protection Act 1975 (now s.188(4) of the 1992 Act) and made a declaration to that effect. However, as to the question of a protective award, Lord Coulsfield, giving the judgment of the Employment Appeal Tribunal, said at paragraph 6:

"There remains the question whether there is any room for a protective award. Because of the way the appellants' case was presented, there was no attempt to direct attention to the question how far, if at all, their discussion with the respondents were actually affected by the relatively scanty information provided on 13 September. It was for the appellants, in our view, to give the Tribunal the material on which to base an assessment of the prejudice which they suffered, and they have not done so. In these circumstances, we do not think that it would be appropriate either to make an award ourselves or to remit the case to the Industrial Tribunal to consider whether one should be made, and we shall, therefore, limit ourselves to making the declaration mentioned above."

Alternatively, Mr Goulding submits that even if the tribunal did err in placing the burden on the Union, that was not determinative of the matter. The tribunal did not decide this case on the burden of proof; it weighed up the relevant factors and reached a permissible conclusion on the basis of its findings of fact that no protective award should be made.

In our judgment the effect of s.189 so far as burden of proof is concerned is similar to that under s.98(4) of the Employment Rights Act 1996. There is no burden on either party, although if the Union fails to lead any evidence which shows that consultation discussions were adversely affected by any breach of s.188, or if no finding to that effect is made by the Industrial Tribunal, then no protective award may be made. Conversely, if the employer fails to lead evidence to counter the suggestion that consultation was adversely affected by any relevant breach, then an appropriate award will be made.

Here, the tribunal heard evidence from both sides over eight days before reaching its findings in the first decision. By that decision it implicitly rejected the Union's pleaded case, set out in further and better particulars of the Originating Application dated 13th July 1995, first that the written information provided to the Union and required by s.188(4) was inadequate, and secondly that the employer did not fully and properly consult with the Union over the matters set out in s.188(6). That left simply the findings that in respect of both Focus and Homeserve/March consultation did not begin at the earliest opportunity, and in respect of Focus, consultation took place over 30 rather than 90 days as required by s.188(2)(a).

In the remedies decision the tribunal must be taken to have had in mind its earlier findings as to breach, to which it refers in paragraph 2 of the remedies reasons, but set against those findings its findings in paragraph 18 of the first decision reasons, effectively repeated in paragraph 6 of the remedies reasons, namely that consultation was thorough; there was a full and frank exchange of views; some concessions were made by the employer, and that both sides were able to reach an accommodation in relation to both the Focus and Homeserve/March redundancies which were reduced into writing in the form of joint statements signed by both parties and which pre-dated the relevant dismissals.

In these circumstances we think that what the tribunal had in mind in paragraph 4 of the remedies reasons was that, in the light of their findings in the first decision, it was for the Union to show that the breaches had an adverse effect on the consultation process. It did not do so, and accordingly no protective award was made. We cannot find that the Industrial Tribunal erred in law in that approach.

Secondly, Mr Millar submits that it will only be in the rarest cases that no protective award will be made once a declaration has been made. He took us to the Collective Redundancies Directive, EC Directive 75/129, and Article 5 of the EEC Treaty which requires domestic legislation to ensure that infringements of community law are:

"... penalised under conditions ... which, in any event, make the penalty effective, proportionate and dissuasive ..."

He relied upon the enforcement proceedings taken in Commission of the EC v The United Kingdom [1994] ICR 664, 725H-726A, where it was held by the European Court of Justice that the then statutory provision allowing an employer to set off against a protective award amounts payable by an employer to the relevant employees under the contract of employment largely deprive that sanction of its practical effect and its deterrent value.

However, as Mr Goulding points out, in that same case the Commission did not pursue its contention that the discretionary nature of the protective award under United Kingdom legislation offended Article 5. [1994] ICR at 679C.

We have also been referred to the domestic authorities. In addition to the Employment Appeal Tribunal decision in MSF v GEC -Ferranti that no protective award would be made in that case, we have considered the approach of the Employment Appeal Tribunal in TGWU v Gainsborough Distributors (UK) Ltd [1978] IRLR 460, where, at paragraph 14, Kilner Brown J raises the question, can there ever be a mil award? At paragraph 20 of the report he answers that question in the affirmative. We agree.

We have also considered the judgment of the Employment Appeal Tribunal in Spillers-French (Holdings) Ltd v USDAW [1980] ICR 31. In that case the Employment Appeal Tribunal rejected the employer's contention that a protective award is solely compensation for the employees' loss of wages as a result of a breach of the statutory consultation provisions. However, in the course of his judgment Slynn J said at 40E-G:

"... 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 course 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."

In our judgment that is the correct approach. The object of the protective award, under domestic legislation which does not offend EEC law, is to compensate the relevant employees for the adverse effects of a failure by the employer properly to consult with their trade union representatives. It is not simply to penalise the employer for his breach. If no such loss is found, there may be no award made. In our judgment this tribunal correctly directed itself in accordance with these authorities in arriving at its conclusion.

A further point is taken by Mr Millar on the scheme of s.189. He submits that the first question which the tribunal must ask itself is whether a protective award should be made under s.189(2). If so, and only then, should it proceed to consider the length of the protected period by reference to what is just and equitable in all the circumstances having regard to the seriousness of the employer's default in complying with any requirement of s.188 under s.189(4)(b).

We think that is an unnecessarily restrictive approach to the scheme of s.189. A protective award is a sum of money representing the employees' wages for the protected period. It follows that if, applying the test contained in s.189(4)(b), the tribunal finds that there should be no protected period, then there will be no protective award. That is the approach taken by this tribunal, directing itself in accordance with TGWU v Gainsborough, and we can find no fault in law with such an approach.

Finally, Mr Millar contends that the tribunal's decision not to make a protective award in relation to the Focus redundancies was perverse, in the sense that it was an "impermissible option" on the facts of this case. He submits that in a case where the employer allowed only 30 days consultation in respect of redundancies affecting 131 employees in various parts of England and Scotland, in circumstances where Parliament laid down a minimum period of 90 days under s.188, it must follow that a protective award should be made.

In our judgment the perversity argument is not made out. The tribunal found that notwithstanding the truncated consultation period all necessary matters were fully covered to the extent that the parties were able to reach an accommodation. This was a genuine consultation process. We cannot say that in these circumstances the tribunal's decision not to make a protective award was perverse.

It follows that we reject the arguments advanced by Mr Millar in this appeal and it must be dismissed. However, before parting with this case we should make it clear that we are laying down no guidelines as to how, in general, an Industrial Tribunal should exercise its discretion under s.189 in deciding whether any, and if so what protective award should be made on that facts of any given case. This case should not be taken as a green light to employers to disregard the consultation requirements of s.188. If they do so, in most cases they will be visited both with a declaration and a protective award.