United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	Mr I D Truscott, Queen's Counsel Instructed by- ANM Group Ltd Thainstone Centre INVERURIE AB51 5XZ
For the Respondents	Mrs J Cullen, Solicitor Of- Messrs Brodies Solicitors 15 Atholl Crescent EDINBURGH EH3 8HA


 


LORD JOHNSTON:

1. This is an appeal at the instance of the employer in a test case arising out of the closure of the appellants' slaughterhouse in Edinburgh, against a decision of the Employment Tribunal which held that the employees who were made redundant, both voluntarily and compulsorily, were entitled to protective awards under and in terms of section 188 and 189 of the Trade Unions and Labour Relations (Consolidation) Act 1992 (TULRA).
2. The Tribunal set out the factual history in some detail but the problem started with the withdrawal from the appellants of a large regular order from the supermarket chain, Asda in January 1998. The executives of the appellants reviewed a number of options and at a board meeting minuted on 15 April, an option was determined upon which involved the sale of the business as a going concern or as a development site, with potentially 155 redundancies. It was accepted that there was no consultation but a number of employees accepted voluntary redundancy, the remainder being dismissed, the whole process being completed by the 1 June.
3. The Tribunal made a number of credibility findings adverse to the employers' position and Mr Truscott, in appearing for them, did not challenge the entitlement of the Tribunal so to hold. However, he maintained that even against that background, the Tribunal had misdirected itself in its application of section 188(1) and, in particular, whether or not at any time during the factual progress did the employer "propose to dismiss as redundant 20 or more employees".
4. The substance of the Tribunal's decision on this point, is to be found on page 28 letter C as follows:-

"In terms of the case law, on 15 April SPM had reached a decision, though not necessarily a final one, and certainly the thought of redundancy was more than a remote possibility (NUPE v General Cleaning Contractors [1976] IRLR 362 (IT)); it was beyond diagnosis of the problem and at the later stage of a specific proposal having been formulated (Hough and APEX v Leyland DAF Ltd [1991] IRLR 194 (EAT)); its state of mind was directed to a planned or proposed course of events and it had a view as to how many were to be dismissed and approximately when it was to take place, much more than mere contemplation (Association of Patternmakers and Allied Craftsment v Kirvin Ltd [1978] IRLR 318 (EAT)), USDAW v Leancut Bacon Ltd [1981] IRLR 295 (EAT)); it was at least a potential redundancy situation, if not an actual one, SPM could identify the particular employees concerned, and consultation might have resulted in new ideas being ventilated, if not to avoid the redundancy situation altogether, to lead to lesser numbers being made redundant than was originally thought necessary, or to find alternative work during the period of consultation (Spillers French (Holdings) Ltd v USDAW [1980] ICR 31 (EAT)); this was the only opportunity for employees through representatives to be able to seek to influence the overall decision and put forward other ideas and other considerations, even if SPM might have thought that consultation was really going to achieve nothing (Sovereign Distribution Services Ltd v TGWU [1990] ICR 31 (EAT)); the information identified in Article 2.3 was available and SPM could identify the employees likely to be affected (Griffin v South West Water Services Ltd [1995] IRLR 15 (ChD)).

Although this was not the only route available to SPM, once it determined on a plan of action which had 2 alternative scenarios, 1 of which included dismissals, then that constituted a proposal within the meaning of section 188.

Taking all that evidence together, with the plain meaning of the words, even using the more restrictive definition of 'propose' adopted in the earlier cases on the interpretation of section 188, the Tribunal was satisfied that by Wednesday 15 April (and certainly by Friday 24, Sunday 26 or at latest Tuesday 28, April) SPM proposed to dismiss as redundant 100 or more employees at one establishment (Gorgie) within a period of 90 days or less.

In answer to the question posed in Hough, 'When did SPM propose to dismiss the Gorgie employees as redundant?', the Tribunal found that this occurred on 15 April, or at least 24, 26 or 28 April.

So even using the more restrictive definition of 'propose' adopted in those earlier cases, in this case the Tribunal found that by 15 April 1998, or at the latest 24, 26 or 28 April, SPM was proposing to dismiss 100 or more employees."

5. In his submissions, Mr Truscott went through the cases that are set out in the passage of the Tribunal's decision we have just rehearsed and submitted that the evidence properly understood, could not support the view that any time up to the date when the dismissal were effected, there was on the table or in the mind of the employer, a proposal to dismiss 20 or more employees as redundant. He based his argument principally upon the vagueness of the options being considered but more importantly so long as the sale of the business as a going concern was being considered, at its highest, redundancies were merely being contemplated and not proposed. He put it this way by reason of the fact that in terms of the European Directive the terms of which the Tribunal set out, the word "contemplate" is used rather than "propose". Mr Truscott freely conceded that if "contemplation" was the correct approach, then he had no point on this part of the case, since that definition was plainly satisfied upon the evidence and the date of 15 April could be used as the pointer. We shall return to the European issue in due course.
6. Mrs Cullen, appearing for the respondents, submitted that upon the evidence, in reality there was a clear proposal to make employees redundant not later than 15 April, since in the absence of the Asda contract, it could not realistically be considered that the business was sellable as a going concern.
7. We accept the criticism of Mr Truscott that the Tribunal appeared to have opted for a number of dates before settling for 28 April as the triggering point but we consider they were entitled to do that in a factual context. What we have to determine, however, is whether the Tribunal was entitled to hold that by that date there was a proposal to dismiss as redundant at least 20 employees.
8. We consider this to be essentially a question of fact given that the word "propose" connotes an intention in the mind of the employer. Upon the evidence we consider the Tribunal was more than entitled to conclude that, realistically, by the board meeting on 15 April, the board were embarked upon a closure policy relating to redundancies which meets the general notion of a proposal. We will, accordingly, accept its reasoning and not interfere with the findings of the Tribunal in this respect.
9. In these circumstances it is not necessary for us to determine the question as to whether the phrase "proposing to dismiss" can or should be construed to equiperate to the word "contemplate" in the Directive to which we have already referred, the terms of which the Tribunal set out ad longum.
10. In this respect the decision of the Tribunal is as follows:-

"Construing section 188 under European Community law

If the Tribunal was wrong in interpreting those facts as falling within the description of 'proposing to dismiss' in section 188 as construed by the UK courts, it considered that (a) it was bound to construe section 188 and those words in light of the Directive and relevant EEC law; (b) that resulted in a wider meaning of 'contemplating collective redundancies' being given to those words, ie that workers' representatives must be informed and consulted with regard to the details of projected collective redundancies and the possibility of reducing the numbers or effects of such redundancies, and are informed, consulted and in a position to intervene (Commission v UK [1994] IRLR 412 (ECJ)), and that consultation is to take place at the stage when it could be about ways and means of avoiding collective redundancies or reducing the number of workers affected, and mitigating the consequences (Dansk Metalarbejderforbund and Specialarbejder-forbundet i Danmark v H Neilsen & Søn, Maskinfabrick A/S (in liquidation) 284/83 [1985] ECR 553, [1986] 1 CMLR 91 (ECJ)); and (c) the evidence certainly established that by 15 April (and at least by 24 April) SPM was contemplating collective redundancies. Consultation after those dates would not have been able to achieve the objectives of avoiding collective redundancies or putting the employee representatives in a position to intervene realistically, as turned out to be the case when consultation was eventually started on 5 May 2000.

In relation to (a), while Griffin was decided before section 188 was amended by the 1995 Regulations, the Tribunal was satisfied that in accordance with the doctrine of indirect effect and Van Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891 (ECJ) that part of Article 2 is now unconditional and sufficiently precise so as to be capable of direct enforcement, so that the Tribunal is under a duty to give full effect to it without waiting for a higher court to rule on it (and see also Harvey E [2452-3, 2477-80]).

Within that legal framework the Tribunal was unable to accept the submission for SPM that such a construction is incompatible with the plain words of the statute."

11. We recognise that a matter of general law, the national courts are obliged to construe the national legislation emanating from or arising out of the European Directive so far as possible to be consistent with and compatible with the terms of the original directive, (Webb v EMO Air Cargo (UK) Ltd [1993] ICR 175 per Lord Keith of Kinkel at page 187 letter E).
12. It has to however been noted, that his Lordship adds the rider that the domestic law must be capable of an interpretation consistent with the Directive, even if it is capable of more than one interpretation. What therefore the case does not determine is whether the Directive can be given effective if the domestic law cannot be construed in any way to be compatible with the terms of the Directive.
13. As we have already indicated, we do not have to determine this point but in case the matter goes further, it is necessary that we express a view.
14. We have some difficulty with the reasoning of the Tribunal in this respect since to our minds the word "contemplate" by definition, is far wider than the more precise word "propose". It seems to us by definition that "contemplation" enjoins a large number of options or at least more than one, while "propose" enjoins a specific proposal. We therefore incline to the view that it is extremely difficult if not impossible to construe "propose" as wide enough to cover "contemplation", although we recognise that upon one view, "proposal" indicates a state of mind and so does "contemplation". What concerns us is whether the less can include the greater while the opposite is certainly the case.
15. In these circumstances we expressly reserve our position in this matter, save again to express the view that we have some difficulty in applying the Webb doctrine to the two sets of terminology. This is perhaps all the more reason for taking a fairly broad view of the facts as the Tribunal have done and which we have supported in determining that there was a proposal to dismiss.
16. The case raised, however, a further point on appeal on an entirely different aspect of the matter, relating to the status on terms of dismissal of the employees who accepted voluntary redundancies packages.
17. In this respect Mr Truscott's argument was simple. For an employee to qualify for a protective award in terms of section 188 there had to be a dismissal as categorised in the general law to trigger the operation of section 189. TULRA had incorporated the Employment Rights Act definition of dismissal, to be found in section 95 and this said Mr Truscott meant that there had to be a termination by the employer or constructive dismissal by reason of his or her conduct. This could not apply when the employment came to an end by mutual agreement based on offer and acceptance.
18. In this respect the decision of the Tribunal is as follows:-

"(A) Voluntary redundancies

Questions arising under section 188, including in particular questions under section 188(1A), clearly depend on when 'the first of the dismissal' took place. Although this phrase refers to the proposed date of the first dismissal, not the actual date (E Green & Son (Castings) Ltd v ASTMS [1984] IRLR 135 (EAT), in effect following GKN Sankey Ltd v National Society of Motor Mechanics [1980] IRLR 8 (EAT) on this point and disapproving dicta in National Union of Teachers v Avon County Council [1978] IRLR 55 (EAT)), it is helpful at this point in this decision to consider whether the voluntary redundancies amounted to dismissals. That is necessary in any event in relation to whether those who accepted the package come within the terms of section 189(1)(c).

In simple terms the offer of voluntary redundancy was not made until 28 April, but by that time SPM clearly had plans for collective redundancies of 100 or more employees – and it had no idea how many would accept voluntary redundancy. If Mr Tierney's letter of 23 April had been followed, SPM would only have been aiming for a few, enough to bring the number of remaining employees below 100. On the evidence the Tribunal found that the reason for the call for volunteers was in order to avoid the 90 day consultation period.

While it may not necessarily follow from the making of voluntary redundancy payments before consultation that a decision to close Gorgie and dismiss all the employees had been taken (cf R v British Coal Corporation ex p Price [1994] IRLR 72 (DC)), in this case the Tribunal had no doubt that such decisions had been taken by SPM by that time.

SPM failed to advise any of the employees of the ongoing negotiations for the sale of the business, although on the face of things that was at least a possibility by the time the offer of voluntary redundancy was made. Mr Pack claimed he thought it was not relevant to the voluntary redundancies, which the Tribunal could not accept. This deprived the employees of information about their potential continuing employment. Nor was any mention of a possible sale made in the briefing paper eventually given to the employee representatives on 1 May. The employees were therefore given information which was incomplete to a material extent, the agreements to take voluntary redundancy were not truly mutual and were properly involuntary rather than voluntary.

In all the circumstances the Tribunal could not accept that there were genuine bilateral agreements between employer and employee amounting to consensual terminations rather than dismissal, especially as the employees did so to gain a right to a redundancy payment. The forms were headed 'Application to be considered for voluntary redundancy' and were signed in consideration of a payment for which the employee gave up his rights to a redundancy payment and pay in lieu of notice. In any event, even taking into account these forms, the Tribunal found that in all the circumstances the voluntary redundancies amounted to dismissals and not terminations by mutual agreement or resignations by the employees.

It does not matter whether the employer's decision is resented or welcomed or invited by the employee, if in the end it was really the unilateral decision of the employer that the contract be terminated: cf Martin v MBS Fastenings (Glynwed) Distribution Ltd [1983] IRLR 198 (CA). Mere acquiescence by an employee in an employer's decision to dismiss does not make that decision into a mutual agreement to terminate; and a person who volunteers to be made redundant is nevertheless dismissed within the meaning of the 1996 Act and may claim a redundancy payment: Birch and Humber v University of Liverpool [1985] IRLR 165 (CA); Burton, Allton & Johnson Ltd v Peck [1975] IRLR 87 (HC). That an employee has agreed to be dismissed on grounds of redundancy or has volunteered for redundancy does not mean that the termination of employment is by mutual consent. In such circumstances, the termination, when it occurs, is a dismissal by the employer: Burton. That decision was designed to make it clear that the fact that an employee has no objection to being dismissed, or even volunteers to be dismissed, does not prevent it from being a dismissal within the meaning of the Act: Birch.

In the circumstances, and given that only partial information was provided to the employees, none of those volunteering did so in circumstances of true choice, there was therefore no true resignation nor willingness on their part, sufficient to constitute a termination by agreement: Burton.

The Tribunal therefore found that the employees at Gorgie who accepted voluntary redundancy were dismissed as redundant; and, as the contracts under which they were employed were terminated by their employer, SPM, they were dismissed in terms of the definition in section 95(1)(a) of the Employment Rights Act 1996 (which applies by virtue of section 298 of the 1992 Act)."

19. Mrs Cullen, in this respect was content to adopt the reasoning of the Tribunal in support of the position that there had been dismissals in respect of the voluntary redundancies.
20. Mr Truscott was careful not to suggest that as a matter of generality, persons who accept a voluntary redundancy package could never be dismissed, although he inclined to the view that the more appropriate approach would be in the right case to regard them as constructively dismissed by reason of the conduct of the employer, creating a resignation of the employee. We are not sure that this is necessarily correct, given the fact that it has been settled that even some element of agreement in the method of departure, does not preclude the employee being dismissed by reason of the voluntary redundancy.
21. In Burton, Allton & Johnson Ltd v Peck [1975] IRLR 87, the point was expressly considered and Griffiths, J held, that the fact that the employee had agreed to redundancy was no grounds for holding that it was not a dismissal. The facts in each case had to be examined.
22. With this approach we agree and in the particular case where the whole background to the departure was determination by the employer to close a factory and make the employees inevitably redundant, the fact that some employees accepted a package as the means of effecting that decision, does not in our opinion preclude a finding that there was a dismissal. For the reasons given by the Tribunal we therefore support its decision.
23. Mr Truscott submitted that the decision in this latter point was not necessary since he conceded lack of consultation and that would therefore leave each employee to claim such remedies might be available to them but we were not clear what that would be if they were taken to have resigned voluntarily from their employment and therefore not been dismissed. We were concerned that if that was the proper approach, the right of the employees in question to claim unfair dismissal, based on an inadequate handling of the redundancy procedure, i.e. lack of consultation, would be lost. Given we consider that it is the duty of a good employer facing a redundancy situation in the interest of the whole workforce to consider as at least one option, voluntary redundancies, and call for such, given again that those who accepted such a procedure are benefiting the remaining workforce to some extent, unless as happened here, all are eventually dismissed. It would discourage, in our opinion, that voluntary redundancy being effected or taking place if by so doing the employees lost rights they would otherwise have if they were compulsorily dismissed. We consider it is the proper approach of this Tribunal and the Employment Tribunal to assess the matter in the way most favourable to the retention of rights that the employees have and there can be no greater right than a right to claim unfair dismissal if the redundancy procedure is inadequately handled by the employer.
24. For these reasons this appeal is refused.