United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A FREER (Solicitor) Legal Officer Instructed By: GMB National Legal Department 22-24 Worple Road London SW19 4DD
For the Respondent	MR C HENSON (Representative) Regional Director Professional Personnel Consultants Ltd Enterprise House Great North Road Little Paxton Cambridgeshire PE19 4BQ


 


MR COMMISSIONER HOWELL QC:

1. This appeal is brought by the GMB Trade Union against the decision of the Bristol Employment Tribunal contained in Extended Reasons sent to the parties on 19 July 1999. In that decision the tribunal held on a preliminary issue that they had no jurisdiction to hear a complaint that the Respondent employer, Man Truck & Bus UK Ltd, had failed to comply with the provisions of section 188 Trade Union and Labour Relations (Consolidation) Act 1992 as to consulting with employee representatives, before imposing altered conditions of employment on part of the workforce.
2. The way the alterations were imposed was by serving notice to terminate the contracts of employment of the groups of employees concerned, with an offer of re-engagement under new terms which the employees would be deemed to have accepted if they continued to report for work. They were given no option of continuing in employment under the old terms. The Tribunal held that in these circumstances the provisions of sections 188-195 of the 1992 Act concerning proposed group dismissals of 20 or more employees had no application, and accordingly struck out the application brought by the GMB claiming a declaration and protective award under section 189. We were told that in conjunction with that application a number of individual applications claiming similar relief had been made by individual employees affected, who are members of the GMB, and that those applications have been stayed pending the outcome of the present appeal to us on the preliminary jurisdiction issue.
3. The provisions of the 1992 Act with which we are concerned implement, and to some extent supplement, those of the EU Council Directives on the approximation of laws relating to collective redundancies, now set out in consolidated form in Council Directive 98/59/EC of 28 July 1998. This provides, as part of the community's Social Action Programme for the completion of the internal market, that member states must legislate for minimum standards of information and consultation with workers where employers are contemplating "collective redundancies". That expression is given an extended meaning by Article 1 of the Directive, as "dismissals effected by an employer for one or more reasons not related to the individual workers concerned", where a minimum number (in the United Kingdom's case 20) is involved. It is further provided by Article 1 that for this purpose "terminations of an employment contract which occur on the employer's initiative for one or more reasons not related to the individual workers concerned shall be assimilated to redundancies, provided that there are at least five redundancies". Article 5 provides that the Directive shall not affect the right of Member States to apply or introduce domestic legislation more favourable to workers than the Directive itself requires.
4. The 1992 Act, in its present form as applicable for the purposes of this case, provides so far as material as follows. By section 188 (1):

"188 Duty of employer to consult ... representatives

(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 affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals."

And there then follow provisions about the timing and content of the required consultation, and the constitution of the "appropriate representatives" who may include recognised trade union representatives or elected appointees. By section 189, where an employer has failed to comply with a requirement of section 188 a complaint may be presented to an employment tribunal on that ground, by any of the employees who have been dismissed or otherwise affected, and in the case of failure relating to representatives of a trade union, by the trade union concerned. If the tribunal finds the complaint well-founded it is required by section 189 (2) to make a declaration to that effect, and it may also make a protective award, which is an award ordering the employer to pay remuneration for a protected period of up to 90 days to any relevant group of employees dismissed or proposed to be dismissed. Section 195, on which the argument before us as well as before the tribunal focussed, is in the following terms:

"195 Construction of references to dismissal as redundant etc

(1) In this Chapter references to dismissal as redundant are references to dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related.

(2) For the purposes of any proceedings under this Chapter, where an employee is or is proposed to be dismissed it shall be presumed, unless the contrary is proved, that he is or is proposed to be dismissed as redundant."

5. Section 195 in that form was substituted by section 34 Trade Union Reform and Employment Rights Act 1993, after it had become apparent that its original form embodying the more limited concept of "redundancy" used elsewhere in United Kingdom domestic law (see now section 139 Employment Rights Act 1996) failed to comply with the requirements of the Directive in which the concept is broader: see Commission v United Kingdom [1994] ICR 664, 724 B-F where the European Court of Justice emphasised that "collective redundancy" in the Directive extends to cases where workers are dismissed as a result of new working arrangements within an undertaking even if, for example, there is no cessation or reduction in business of the undertaking itself, or decline in demand for work of a particular type.
6. The word "dismissal" is given no special meaning by the Directive. However in the domestic legislation, section 298 of the 1992 Act provides that "dismiss" and "dismissal" in relation to an employee are to be construed in accordance with Part X Employment Rights Act 1996. The relevant definition for the purposes of that Part is in section 95 (1) of the 1996 Act, which prescribes so far as material that

"... an employee is dismissed by his employer if …

(a) the contract under which he is employed is terminated by the employer (whether with or without notice)".

7. We are concerned on this appeal only with the narrow question of whether the Tribunal was right to decline jurisdiction in this case on the ground that there had been no "dismissals" or "proposed dismissals" within section 188 of the 1992 Act. The right of the GMB to maintain the appeal before us against the tribunal's decision to reject their application on that preliminary jurisdiction issue was (rightly in our judgment) not challenged by the Respondents. However we record that they made clear they were reserving the right to challenge the GMB's status to pursue the proceedings before the tribunal should the appeal be successful: in particular as Mr Henson who appeared on the respondent's behalf told us that all the employees affected had in fact continued to work and thus in the employer's view accepted the altered terms imposed on them. In this context we also record that in its Originating Application the GMB states that it is an independent trade union recognised by the Respondents in respect of employees at the plant affected, and its specific argument to the tribunal on this basis to be entitled to an order under section 189, recorded in paragraphs 7 (e)-(f) of the tribunal's extended reasons, does not appear to have been challenged by the Respondents in the argument recorded at paragraph 8: the question of a declaration to establish the principle may of course be important for the union even if no individual monetary awards are appropriate. The tribunal recorded no finding, in view of its decision that the circumstances gave rise to no right to bring proceedings under s. 189 in any event. To that we now turn.
8. The way in which the alterations in employment terms were imposed, and the reason why the extent of the "collective dismissal" provisions of section 188 became an issue, appear from the admirably clear summary in paragraphs 1-5 of the tribunal's extended reasons, at page 4 of the appeal file before us:

"1. The applicant, a union representing employees employed by the respondent, complains that the respondent has failed to comply with the provisions of s.188 Trade Union and Labour Relations (Consolidation) Act 1992 and claims a protective award under s. 189 of the 1992 Act. The respondent asserts that since there was no proposal to dismiss as redundant any employees nor had any employees been made redundant, the provisions of the 1992 Act do not apply and there is no jurisdiction for this Tribunal to hear the applicant's complaint.

2 Upon considering documentary evidence and hearing the representations of the parties we make the following findings of fact. Following the merger of two independent businesses, the respondent considered in 1997 the need to harmonise the terms and conditions of employment of the two groups of employees now employed in the merged business of the respondent.

3 Draft changes to employment documentation were prepared and notice of the variations served on individuals, departmental heads and internal GMB representatives.

4 Following consultation, the respondent indicated that the new terms and conditions of employment would apply to all employees as from 1 April 1999. Subsequent consultation took place and a revised date for implementation of the variations was notified to all employees as at 1 June 1999.

5 By a letter dated 29 April 1999 to all employees, they were informed that their existing employment under the old terms was terminated and fresh employment was offered as from 1 June 1999 upon the new terms. Acceptance of employment would maintain continuity: if employees reported for work on 1 June they were deemed to have accepted the new terms."

9. An example of the letter referred to by the tribunal was also produced to us. It was dated 29 April 1999, and in clear and unmistakable terms gave notice that the employee's existing employment under her current terms of employment would be terminated, though the employer was prepared to offer employment under its new terms from 1 June 1999 and the new terms would "maintain continuity as regards length of service". The letter further stated clearly that the employee would be deemed to have accepted the new terms if she reported for work on 1 June 1999. There was thus no question of the employee being able to continue on the old terms. The existing employment under those terms was to cease compulsorily from that date.
10. The GMB's argument therefore was, and is, that the way thus chosen to impose the new terms necessarily involved a proposal to dismiss (within the meaning of s. 95 Employment Rights Act 1996) all the employees to whom that letter was sent. Since there were more than 20 of them, and the dismissal notices were issued on a group basis unrelated to individual reasons special to the particular recipients, it had to follow that they brought into operation the provisions of section 188 of the 1992 Act because under the Directive and s. 195, "redundancy" for this purpose covers all such dismissals imposed on a collective basis, whatever the reason.
11. The tribunal's reasons for rejecting this argument were set out, again in admirably clear terms, in paragraphs 9-12 of their extended reasons as follows:

"9 The essence of a redundancy (however it may be defined) is that jobs or workers are lost. The legislative purpose of Chapter II of the 1992 Act is 'Procedure for Handling Redundancies': it sets out provisions with which employers must comply as to consultation with representatives of employees where certain specified numbers of redundancies (i.e. lost jobs or workers) are envisaged. It provides for how the consultation should be undertaken, what it should seek to achieve and the time limit within which it should be undertaken. It provides protection for employees (under s.189) where such consultation is not properly undertaken.

10 While s.195 of the Act and Commission v United Kingdom widen the definition of redundancy under s.139 Employment Rights Act 1996 to include (a broadly described) 're-organisation', it is in our view not intended that that section should be interpreted to include 'technical' dismissals that are not proposed to result in the loss of workers or jobs, but are merely for the purpose of implementing changes to the terms of employment. That view is supported by the learned writers of Harvey who, in describing the range of 'labels' that may be attached to the definition of redundancy, clearly envisage that the consequences, whatever the label, is the loss of jobs or workers.

11 Section 195 (2) provides that all dismissals that are for a reason not related to the individual concerned are presumed to be by way of redundancy unless the contrary is proved.

12 We find that the respondent never had nor does it have any intention or proposal to dismiss as redundant any employees: in other words, it has never proposed that jobs or workers be lost nor was the proposed harmonisation of the terms and conditions of employment a 're-organisation" of the business of a sort envisaged by Commission v United Kingdom or intended to be covered by s.195 of the 1992 Act. We are satisfied, therefore, that the presumption contained in s.195 (1) of the 1992 Act is rebutted and the respondent has proved that throughout the period from December 1998 to 29 April 1999, there was no proposal to dismiss as redundant any of the employees affected by the proposed changes in the terms and conditions of employment."

12. Before us, Mr Freer who appeared for the GMB argued that in reasoning as they did the Tribunal had misdirected themselves; and in particular had failed to give effect to the extended meaning of "redundancy" now expressed in the domestic legislation in section 195 (1) of the 1992 Act and required by the broad terms of Article 1 of the Directive. The provisions of section 188 requiring consultation were in his submission attracted wherever, as here, an employer was proposing to impose measures on a group of the workforce, on a group and not on an individual basis, involving the termination of their existing contracts of employment. That would undoubtedly constitute a "dismissal" within the definition in section 95 of the Employment Rights Act 1996 imported for this purpose into the 1992 provisions by section 298.
13. Mr Henson who appeared for the employers argued that the tribunal's conclusion had been correct, as despite the terms of the letters the employers had never envisaged any reductions or changes in the workforce so long as the new terms, intended to harmonise conditions among employees, were accepted. No one had actually been dismissed and all had accepted the altered terms put forward. There had been no change in physical working arrangements, although admittedly there had been some reduction in the previous rights of employees in the event of an actual redundancy occurring.
14. In our judgment the arguments of Mr Freer on behalf of the GMB are to be preferred. It appears to us that on the preliminary issue as to jurisdiction, which is the only one before us on this appeal, the tribunal did misdirect themselves by failing to give effect to the unambiguous provisions of the domestic legislation as they now stand, and attempting to restrict them to a concept of "redundancies (ie lost jobs or workers)" which is not justified in this context, given the breadth of the definition of "dismissal as redundant" in section 195 (1) as it now stands.
15. Nor in our judgment were they right to hold that section 195 had no application to what they described as "technical" dismissals which the employer did not intend to result in the loss of workers or jobs (provided that its new terms were accepted), when the means chosen to impose those new terms necessarily involved what was undoubtedly a blanket dismissal of all the employees affected from their existing employment, by express notice squarely within the definition in section 95 (1) (a) of the Employment Rights Act 1996. That is made the relevant meaning of "dismissal" for this purpose by section 298 of the 1992 Act (to which we note the tribunal did not refer) unless the context otherwise requires; and we can see no reason to infer any requirement or intention that in the phrase "proposing to dismiss" in section 188 some more restricted or uncertain meaning of dismissal should be substituted for the clear definition in s. 95.
16. Accordingly it appears to us plain on the evidence before the tribunal that, by 29 April 1999 at the latest, the employers were proposing to dismiss the employees affected, on a group basis and not for reasons related to the particular individuals concerned. We accept Mr Freer's argument that although to describe this as "dismissal as redundant" is a good deal wider than the concept of redundancy employed elsewhere in the domestic legislation, that is what section 195 (1) plainly says; and we also accept his argument that this does not lead to any absurdity. All that section 188 requires is a minimum standard of reasonable consultation. If the actual changes to be imposed on a group basis by what amounts to dismissal are relatively minor, the consultation need not be complicated or prolonged. On the other hand, the Directive's aims of safeguarding workers' rights in the event of redundancy would not be well served if employers were able to impose substantial reductions in redundancy rights by contractual alteration under threat of dismissal, restricting consultation to a later stage when actual job losses are to be imposed on those whose rights have already been reduced.
17. For those reasons we allow the appeal, set aside the decision of the tribunal and substitute our own decision on the preliminary issue that by reason of the proposed dismissals notified to employees by the letters dated 29 April 1999 the employer was, by that date at the latest, under a duty to consult appropriate employee representatives in accordance with s. 188 Trade Union and Labour Relations (Consolidation) Act 1992 as amended. We remit the case to the tribunal for all further relevant questions under Chapter II of that Act to be considered and determined, by either the same or a differently constituted tribunal.