United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR HENDRY (Representative) Collinson Grant Consultants Ltd Colgran House 20 Worsley Road Swinton Manchester M27 5WW
For the Respondent	NO APPEARANCE BY OR ON BEHALF OF THE RESPONDENT


 


JUDGE PETER CLARK:

1. The applicant before the Manchester Employment Tribunal, Mrs Bulwich, was employed by the respondent below, Mills and Allen Ltd ['the Company'] from 21st August 1993 until her dismissal by reason of redundancy effective on 31st July 1998. On 28th July 1998, during her notice period, she presented an Originating Application to the Employment Tribunal.
2. The matter came on for hearing before a tribunal chaired by Miss A F W Woolley on 11th November 1998. Two complaints were then considered. The first was a complaint of unfair dismissal, the second was a complaint that the Company had failed to consult employee representatives in accordance with s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 ['the 1992 Act'].
3. The tribunal upheld both complaints by a reserved decision promulgated with extended reasons on 14th December 1998. There is no appeal by the Company against the finding of unfair dismissal; this appeal is directed solely to the tribunal's declaration under s.189(2) and the making of a protective award under s.189(3) of the 1992 Act.
4. S.188(1) provided:

"(1) 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 shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be so dismissed."

5. The sole issue before the Employment Tribunal concerned the meaning of the expression "at one establishment". It was common ground that the Company had not consulted employee representatives before dismissing 24 employees, including the applicant, who were members of the direct sales team. There was no relevant trade union recognition by the Company. The applicant contended that the relevant establishment was the direct sales team nation-wide, in which case the 20 employee threshold in s.188(1) was passed. The Company argued that the relevant establishment was the Manchester office at which the applicant was based, in which case only two employees were to be dismissed and no breach of duty under s.188(1) arose.
6. The tribunal considered those rival contentions in the context of their findings of fact which were, so far as are material, as follows.

The Facts

7. The Company operated an outdoor advertising business with a number of poster sites throughout the country. They employed some 340 people after the redundancy exercise with which this case is concerned. Prior to that exercise they had three sales teams; the national sales team based in London, dealing with advertising agencies; the regional sales team, dealing with regional offices of advertising agencies, with team members based in Manchester, Birmingham, Bristol and Glasgow, and finally the direct sales team which sold poster sites direct to businesses.
8. The national direct sales manager was Mr Glendinning, based in London. The applicant was, at the material time, employed as the direct sales manager for the Granada (television) region based in Manchester. As at June 1998 only one direct sales executive reported to her.
9. The Company planned a reorganisation of the sales force which initially envisaged that the entire direct sales team staff would be dismissed as redundant. In the event they dismissed 24 employees around the country, all members of the direct sales team. The applicant and her direct sales executive based at Manchester were among those to be made redundant.

The Law

10. There is no definition of the expression "establishment" in the 1992 Act; however that expression has been the subject of judicial consideration.
11. We have been referred to the House of Lords decision on the meaning of "establishment" in the context of Selective Employment Tax (SET) legislation in Lord Advocate v Babcock and Wilcox [1972] 1WLR 488. That case and the Divisional Court decision in another SET case, Secretary of State for Employment v Vic Hallam Ltd [1969] 5ITR 108, were considered in Barratt Developments Ltd v UCATT [1978] ICR 319, where the EAT held that an Industrial Tribunal was entitled to conclude that 14 separate construction sites linked by telephone to the Company's headquarters constituted one establishment for the purpose of redundancy consultation with the trade union under what was then Part IV of the Employment Protection Act 1975 (now Part IV, Chapter II of the 1992 Act), as opposed to each site constituting a separate establishment. We draw from that case the general principle that the question as to what constitutes "one establishment" is essentially a question of fact for the Employment Tribunal.
12. Conversely, as a matter of fact, in Barley v Amey Roadstone Corporation Ltd (No.2) [1978] ICR 190, the EAT upheld an Industrial Tribunal decision that individual depots at which employees were made redundant were each separate establishments, rather than forming one grouping for the purposes of the duty to consult under s.99 of the Employment Protection Act 1975.
13. Further, in Clark's of Hove Ltd v Bakers Union [1978] ICR 1076 a bakery and 28 retail outlets were held to be one establishment for redundancy consultation purposes under the 1975 Act.
14. Finally the European Court of Justice has considered the meaning of "establishment" as it appears in Article 1(1)(a) of the Collective Redundancies Directive 75/129 in Rockfon [1996] IRLR 168. In giving their judgment the Court said this at paragraph 34:

"… the term 'establishment' appearing in Article 1(1)(a) of the Directive must be understood as meaning, depending on the circumstances, the unit to which the workers made redundant are assigned to carry out their duties. It is not essential, in order for there to be an 'establishment', for the unit in question to be endowed with a management which can independently effect collective redundancies."

The Employment Tribunal decision

15. The Manchester tribunal dealt with the claim for a protective award at paragraphs 35-37 of their reasons. We shall not repeat them here, but make the following observations:

(1) the tribunal found that there was no real organisational link between the direct sales staff and the rest of the employees stationed at a particular office. On the other hand the direct sales department was treated by the Company as a distinct entity within their organisation prior to the redundancies. Indeed, in the letter of dismissal to the applicant dated 2nd July 1998 Mr Glendinning said:

"Direct sales will no longer exist as a separate function, instead becoming part of the integrated regional sales operation."

(2) the tribunal acknowledged, as the earlier cases make clear, that the question was one of fact in each case.

(3) on balance they found that the unit to which the applicant was assigned was the direct sales team and not the Manchester office.

The Appeal

16. Mrs Bulwich failed to provide an Answer or to respond to correspondence from the EAT. Consequently she was debarred from defending the appeal by order of the Registrar dated 28th June 1999.
17. In these circumstances we have heard only from Mr Hendry in support of the appeal. He submits first that the tribunal fell into error, at paragraph 36 of their reasons, by relying on the lack of unity in the various activities carried on by the Company at Manchester. He contends that a connection between functions or activities at a particular place is not a requirement of the Rockfon test.
18. We reject that submission, which illustrates the danger of extracting a single sentence from an Employment Tribunal's reasons. The question for the tribunal was, to which unit was the applicant assigned? Had the redundancies been announced locally at the Manchester office it may well be that Manchester would have been the relevant establishment for that purpose. However, these redundancies were directed solely to the direct sales team nation-wide. That organisation is capable of fulfilling the requirements of "a unit to which the workers made redundant are assigned". The Employment Tribunal so found. They were, in our judgment, entitled to do so.
19. Alternatively, Mr Hendry submits that the tribunal's conclusion was perverse. That is a difficult hurdle for an appellant to surmount, as Mr Hendry recognises. In our judgment this appellant has not come close to doing so.
20. In these circumstances we shall dismiss this appeal.