United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR T R NAYLOR (Employment Rights Adviser) Personnel Advisory Services 49 Warrington Road Cuddington Cheshire CW8 2LN
For the Respondent	MR MARTYN WEST (Representative) Peninsula Business Services Ltd Delphian House Riverside New Bailey Street Manchester M3 5PB


 


MR JUSTICE WALL:

1. This appeal raises an important point under section 188 of the Trade Union & Labour Relations (Consolidation) Act 1992, albeit one which is now of historical interest. The seven Appellants are former employees of the Respondent, who were either dismissed, or whose employment came to an end, on various days between 31 July 1999 and 31 August 1999. Each of the Appellants brought a complaint of unfair dismissal against the Respondent under the provisions of Part X of the Employment Rights Act 1996. In addition, three of the Appellants, Messrs Donnelan, Williams and Davenport complained that at the time of their dismissal they were elected employee representatives, and that the Respondent had failed to consult them about their proposal to dismiss employees on account of redundancy as required by section 188 of TULRA. Messrs Donnelan, Williams and Davenport accordingly applied for a protective award on behalf of the categories of employees whom they asserted they represented. In addition, the same three Appellants complained that their dismissals were automatically unfair, as they had been dismissed for carrying out their duties as employee representatives, or because they intended to do so, and that accordingly they were entitled to a Special Award of compensation. Finally, Messrs Light and Ryan also made a complaint that the Respondent had made an unauthorised deduction of wages in failing to pay them one year's holiday pay on termination of their employment. There is, however, no appeal against the Tribunal's dismissal of that complaint.
2. In what is a careful and well-structured decision, the Tribunal made a number of detailed findings of fact. We take the facts of the case, accordingly, from the Tribunal's reasons.
3. The Respondent is a limited company engaged in the manufacture of polythene film. At the time of the hearing before the Tribunal it employed some 165 employees on its site at Winsford. At the time of the events with which the Tribunal was concerned, some 184 employees were employed on the site. The company did not recognise any trade union for the purposes of collective bargaining in respect of any of the categories of employees employed at Winsford.
4. Early in 1999 the Respondent's senior management came to the conclusion that it was necessary on account of over-capacity in the market to reduce manufacturing costs in order to become more competitive. As a result, it became necessary to reduce labour costs. Having reached that conclusion the Respondent engaged a firm of Consultants to carry out an investigation, and to make recommendations for this purpose.
5. There were three separate businesses carried on by the Respondent at the Winsford site. Each had a separate Unit Manager, Chargehands and Production Managers together with shop floor workers known as operators.
6. The Tribunal found that members of the Consultants' staff were on site for a considerable period of time before they proffered advice to the Respondent. In due course, that advice was that a reorganisation should take place whereby three cells should be created within one business. It was clear, that the Consultants' suggestion could not be implemented within the current organisation.
7. The Respondent did not adopt all aspects of the Consultants' recommendations but they did adopt those which appeared most likely to produce the cost-savings which they wished to achieve. As a result, it was decided there was a need to create twelve new posts to be known as Team Leaders and to dispense with the posts of Unit Managers and Chargehands. However, the management wished to retain the Respondent's most skilled employees, and as a result management hoped to bring in the required changes involving the reduction of manpower largely on a voluntary basis.
8. The Consultants finished their work in about April 1999. Having reached its decision, the Respondent decided that the new posts of Team Leaders should be open to application from any existing member of its workforce at Winsford who wished to apply. It was also decided that if possible the reorganisation should be brought into effect in late August / early September 1999, and that if any existing Unit Manager or Chargehand applied and was unsuccessful, alternatively did not wish to apply, then he would be offered the alternative position of operator, and that if he accepted such a position he would have certain salary protection given for a period of time.
9. The Respondent also decided that the selection process for the persons appointed Team Leaders would involve independent Consultants engaged by the Respondent, and would take place away from the Winsford premises.
10. Although the Respondent did not recognise any independent Trade Union in respect of any of the categories of employees at Winsford, the Tribunal found as a fact that the Respondent's senior management "carried out what can only be described as extensive consultations with the employees including the Applicants who might possibly be affected by the proposals". Those consultations began in late May 1999 with a meeting called between management, the Unit Managers and Chargehands, and a similar meeting was held about the same time with the Respondent's shopfloor workers. At this meeting, the Tribunal found that management fully explained the proposals including the proposed structure of the production area and the process which would be followed in order to select the new Team Leaders. Management also explained that they hoped to complete these changes to the organisation by September, and that some reductions in the size of the workforce would be inevitable, albeit that they hoped to achieve this by means of volunteers if possible. At the meetings, questions were invited and were asked and answered. Management made it clear that any member of the workforce who wished to apply for the new post of Team Leader was at liberty to do so and would be supplied with a job description.
11. The Tribunal then set out in full a letter which was sent to each of the employees in late May which set out in terms the process of reorganisation and its consequences.
12. The selection process for the appointment of Team Leaders took place in June 1999, and eight persons were initially selected. However, one of the eight withdrew subsequently and a further five were due to be selected in September 1999. The candidates who had been unsuccessful in the first selection process were at liberty to make a second application, and the positions involved were also advertised in the local press.
13. Each of the Appellants had at least one individual meeting with management, and Messrs Williams and Baker agreed to be made redundant.
14. The Tribunal in its reasons goes carefully through the case of each of the Appellants, setting out the steps which were taken by the Respondent to consult and inform each. We need not repeat that exercise in this appeal.
15. In late July 1999, Messrs Donnelan, Davenport and Williams visited Mr Naylor, an Employment Rights Adviser who represented the Appellants in the Tribunal below and before us. As a consequence of that meeting, a number of the Respondent's workforce met in the Brighton Bell public house near Winsford on 11 August 1999, a meeting which Mr Naylor attended. At that meeting, there were present members of the three groups of employees who were potentially affected by the proposed redundancies – Unit Managers, Chargehands and shop floor workers, and the Tribunal found as a fact that at the meeting Messrs Donnelan, Davenport and Williams were elected by those attending to the position of employee representatives. It was also decided at the meeting that Messrs Donnelan, Davenport and Williams would approach the Respondent's management about the proposed redundancies with a view to opening negotiations if possible about them. It was also decided that a claim for a protective award would be made on behalf of the above-mentioned categories of employees. This was duly done by Mr Naylor sending a faxed IT1 form to the Liverpool Regional Office of the Employment Tribunals.
16. On the following day 12 August 1999, Mr Naylor wrote to the Respondent's Financial Director, Mr Gayle. That letter read as follows:

"Dear Mr Gale

Tribunal Submission – Protective Award

Thank you for your fax of 5^th August asking that I deal with you directly over matters affecting Britton Taco. I had previously been dealing with Peninsula Business Services.

Yesterday I attended a meeting of the Britton Taco workforce where it was agreed that a submission would be made to an Employment Tribunal seeking a 'protective award' against the company.

Following is a copy of Section 11 of the submission that was made yesterday evening to the Liverpool Tribunal. It is being claimed that the company is in breach of Section 188 of the Trade Union and Labour Relations (Consolidation) Act. Breaches under the Act attract 30 days pay for each affected employee. It also brings into question the fairness of any dismissal on the grounds of redundancy following such an award.

I assume that you will be dealing with the claim on behalf of Britton Taco.

Yours sincerely

T R Naylor."

17. The reference to the "Section 11" is a reference to the document which appears at page 27 of our bundle, and which is in the following terms:

"Some weeks ago, the company announced that there were to be redundancies. There are no recognised Trade Unions on site. The company did not ask for representatives to be elected from the affected groups. Although the company said that there would be consultation, to date there has been no collective discussions and no request from the management for representation from the affected groups.

There are three affected groups of workers. There are 12 Unit Managers, 16 Chargehands and 24 shopfloor workers out of approximately 90 employees, threatened with redundancy.

The company has failed to provide written information regarding the reasons for the redundancies or any other specified information as detailed in section 188 of the Trade Union and Labour Relations (Consolidation) Act.

We are requesting that a protective award is made to recognise the failure of the company to consult over the redundancies which are in the process of happening.

Representatives:

Mr Paul Davenport

Mr Brian Donnelan

Mr John Williams."

18. On what appears to have been 11 August 1999, six of the Appellants (including Messrs Donnelan, Davenport and Williams) wrote to Mr Simpson, the Respondent's Operations Director in the following terms:

"Dear Mr Simpson

Redundancies of Chargehands

Having taken legal advice we are writing to request clarification of our positions.

On the 25^th May we were told that the post of chargehand was to be redundant. It was said that the situation would be clarified and finalised in a matter of weeks. It is now 11^th August and no meaningful consultation has taken place. Alternative positions open to us have not been discussed and our entitlements with regard to redundancy and a notice of payments have not been finalised.

Some of us are being asked to carry out activities that Operators are required to do. This is not acceptable without consultation and agreement. No consultative body has been elected by the workforce to allow this to take place.

We would be pleased if the company could clarify the position before any further action is taken."

19. The Tribunal pointed out that the letter does not identify Messrs Donnelan, Davenport and Williams as employee representatives, and found as a fact that they never informed Mr Simpson prior to their dismissals that they had been so elected, and that they wished to discuss the Respondent's intention to dismiss employees on account of redundancy. The Tribunal also found that at no stage did they advise Mr Simpson or his secretary that they had been so elected, and that they wished to speak to Mr Simpson in their capacity as elected representatives in order to discuss redundancies.
20. On 25 August 1999, Mr Simpson sent an identically worded letter to Messrs Donnelan, Davenport and Williams, and the other three signatures of the letter of 11 August. That letter read:

"Dear Brian

Redundancies of Chargehands

I refer to your undated letter regarding the above, the contents of which have been considered. I would respond as follows:-

It is quite wrong to suggest that no meaningful consultation has taken place, in fact the opposite is true in that the consultations have been extensive. All areas of the proposed restructuring have been discussed with you and you have been made fully aware of the impact this will have on you and the alternatives available.

For your information, and to remind you, the following is a list of meetings you have been involved in.

12^th July 1999

6^th August 1999

All meetings discussed:-

Reasons for redundancies

Options available:

Stay as operator

Possible print positions

Possible CMC project position

All were told we wished to retain skills and experience in business.

I trust this clarifies the matter for you and in light of the foregoing you will now reconsider the views expressed in your letter.

Yours sincerely

Operations Director."

21. Mr Baker's employment had ceased on 31 July 1999. Mr Williams and Mr Light's employment came to an end on 21 August 1999: Mr Donnelan's and Mr Davenport's employment came to an end on 22 August 1999, and Mr Wallworth was dismissed with effect from 31 August 1999 as was Mr Ryan.
22. The Tribunal found that none of the complaints made by the Appellants was sustainable, and all seven applications were dismissed.
23. Before us, the principal argument advanced on the Appellant's behalf was that the Respondent had failed to provide any information on a collective basis or to consult as required by Section 188 of TULRA. In the Notice of Appeal it was submitted that in the absence of collective consultation, each individual employee was not in a position to see the whole picture, and their own relationship to the proposals put forward by the Respondent. The individual consultation which took place had not been effective, and the failure to meet the requirements of Section 188 meant that the individual consultation was substantially flawed. It was, accordingly, argued that the dismissals were, as a consequence, unfair. When the matter was before the EAT for preliminary hearing, the EAT, in a constitution chaired by Lindsay J, the President, took the view that as TULRA stood in 1999 it was at least arguable that it was an error of law for the Tribunal to hold that an employer was not liable to invite the election of employees' representatives, even if that was the only arrangement then required of him. The Tribunal, however, made it clear that the legislative history was going to need to be extracted from the Queen's Printer's copy.
24. That has been done, and it is common ground that Section 188 of TULRA, as it was in force in 1999, it accurately set out in Butterworths Employment Law Handbook, Seventh Edition at paragraphs (691) and (692). The section is in this form:

"Due to amendments to TULRA (which had received the Royal Assent on 16 July 1992) consequent upon The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995."

25. Section 188 (1), (1A) and (1B) read as follows:

"(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.

(1A) the consultation shall begin in good time and in any event –

(a) where the employer is proposing to dismiss 100 or more employees as mentioned in subsection (1), at least 90 days,

(b) otherwise, at least 30 days

before the first of the dismissals takes effect.

(1B) For the purposes of this section the appropriate representatives of any employees are –

(a) employee representatives elected by them, or

(b) if the employees are of a description in respect of which an independent trade union is recognised by the employer, representatives of the trade union,

or (in the case of employees who both elect employee representatives and are of such a description) either employee representatives elected by them or representatives of the trade union, as the employer chooses."

26. Sub-section (2) of Section 188 deals with what the consultation must include and sub-section (4) sets out what the employer has to disclose to the appropriate representatives for the purposes of the consultation. Section (7A) reads as follows:-

"(7A) Where –

(a) the employer has invited any of the employees who may be dismissed to elect employee representatives, and

(b) the invitation was issued long enough before the time when the consultation is required by subsection (1A)(a) or (b) to begin to allow them to elect representatives by that time,

the employer shall be treated as complying with the requirements of this section in relation to those employees if he complies with those requirements as soon as is reasonably practicable after the election of the representatives."

27. For the Appellants, Mr Naylor argued that the requirement for the employer "to seek" the election of representatives was implicit in the structure of the statute. He pointed out that the statute detailed what had to be given to the representatives in writing and relied in particular on Section 188(7A). He submitted that the Respondent failed to invite any of the employees who may be dismissed to elect employee representatives and failed to begin to allow them to elect representatives. This, he argued, represented a failure by the Respondent to obey the terms of Section 188.
28. He argued that the workforce had elected three representatives on 11 August 1999 and that no suggestion had been made that this election was in any way inappropriate or improper. Any employee could make a claim for a protective award, and even if Messrs Donnelan, Williams and Davenport had not been duly elected, their claims were nonetheless valid.
29. Mr Naylor also argued that in August 1999 there were no legal requirements about how the election of representatives should be carried out.
30. For the Respondent, Mr Martyn West took us through the legislative history of Section 188. When originally enacted, the provisions in Section 188, and the right to make a complaint in respect of a particular award, were limited to independent Trade Unions. Accordingly, the wording of both Section 188 and 189 had reflected that position.
31. The right, he argued, remained restricted providing for an obligation to consult an independent Trade Union, until the amendments by virtue of the 1999 Regulations. The amendments to the Act were for the purpose of expanding the obligation to consult, so that where there was no Trade Union but there was a work's council or representatives already elected, there was an obligation to consult with those bodies, not just a recognised Trade Union. As a result, he argued, the whole of sub-section (1) and (2) of Section 188 of the Act were deleted, and the four new sub-sections (1), (1A), (1B) and (2) were substituted. Other consequential amendments were made, including those to sub-section (7), and a new sub-section (7A) was inserted with regard to the obligation to consult as soon as reasonably practicable after the election of representatives.
32. Mr West pointed out that Section 188 had been amended yet again by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999, which came into force on 28 July 1999 save insofar as they related to dismissals taking effect before 1 November 1999. Whilst these Regulations do not, accordingly, apply to the instant case, Mr West argued that the 1999 amendments to Section 188 were plainly designed to correct the lacuna left by the 1995 Regulations. Thus, the new Section 188(1) reads:

"(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."

In addition, Section 188(1B) defines "appropriate representatives":-

"(a) … representatives of the [employees'] trade union, or

(b) in any other case, whichever of the following employee representatives the employer chooses:-

(i) employee representatives appointed or elected by the affected employees otherwise than for the purposes of this section, who (having regard to the purposes for and the method by which they were appointed or elected) have authority from those employees to receive information and to be consulted about the proposed dismissals on their behalf;

(ii) employee representatives elected by the affected employees, for the purposes of this section, in an election satisfying the requirements of section 188A(1)."

33. Mr West argued that an application of the "mischief" rule to the two sets of amendments demonstrated that the Act was further amended to provide the relief which the Appellants now seek, but which was not open to them in 1999.
34. Against this background, Mr West submitted that in relation to dismissals taking effect before 1 November 1999, the Respondent was obliged to consult with recognised Trade Unions, existing elected representatives, or for that matter any representatives elected by the workforce as a consequence of the redundancy exercise or during its process. However, until 1 November 1999, he argued that there was no obligation to seek employee representatives.
35. Mr Kay relied on the reasons given by the Tribunal in paragraph 16 which were as follows:-

"We turned next to the complaint that these 3 applicants had not been consulted as employee representatives by the respondents in accordance with the provisions of Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 and therefore Protective Award should be made. We found that it was clear at the times of the dismissals i.e. prior to November 1999 the statutory amendments which were brought into effect in November 1999 had not yet come into effect and they did not apply to this case. At the time of the applicants' dismissals there was no requirement upon the respondents to make arrangements for the election of employee representatives. At the time of the applicants' dismissals in August and in the period leading up to their dismissals, the respondents had not been informed by the applicants nor by anyone else that the applicants had been elected as employee representatives of the workforce and that they wished to be consulted in accordance with the provisions of the 1992 Act. We found that these complaints were not well-founded and dismissed them."

36. Mr Kay also relied on paragraph 9(vii) and 9(ix) of the Tribunal's reasons, which read as follows:

"(vii) As is stated above the respondents did not recognise any independent trade union for the purpose of the collective bargaining in respect of their various categories of employees, nor were they legally required, at the times with which we were concerned if a redundancy situation arose, to make arrangements to have employee representatives elected by affected employees.

(ix) In their evidence to us the applicants and in his submissions to us on their behalf Mr Naylor suggested that the respondents' management did not adequately carry out consultation with the employees who might be affected by proposals to make employees redundant. We did not accept this evidence or this submission as valid since it was clear from the oral evidence of both Mr Simpson and the documentary evidence adduced which we found both accurate and compelling that once the respondents' senior management decided to adopt the recommendations of the consultants to abolish the posts of Unit Manager and Chargehands and came to the conclusion that it might be necessary to reduce the total number of employees by means of redundancy, they carried out what can only be described as extensive consultations with the employees including the applicants who might possibly be affected by the proposals. These consultations began in late May 1999 when a meeting was called between management (including Mr Simpson) and the Unit Managers and Chargehands (including all the applicants except Mr Baker who was employed as a machine operator and as a result was a shop floor worker). A similar meeting was held about this time with the respondents' shop floor workers. At this meeting management fully explained the proposals including the proposed structure of the production area and the process which would be followed in order to select the new Team Leaders. Management also explained that they hoped to complete these changes to the organisation by September and that some reductions in the size of workforce would be inevitable but that they hoped to achieve this by means of volunteers if possible. At these meetings management invited any employees who wished to ask questions to do so. A number of questions were asked and answered. Management also informed the meeting that any member of the workforce who wished to apply for the new posts of Team Leader was at liberty to do so and if they did so they would be supplied with a job description."

37. Mr West submitted that in the absence of an obligation to arrange elections for representatives, and there being no recognised trade union or existing representatives, there was no obligation to consult representatives, there being none to consult. In any event, he submitted, the representatives were consulted, as individuals, in a way which the Tribunal described as "extensive". By the time there was any indication as to the existence of representatives, Mr Baker's employment had come to an end, and that the remaining six Appellants ceased to be employed by the Respondent by 31 August 1999.
38. As to unfair dismissal, Mr West submitted that there had been extensive individual consultation as set out in the reasons, and bearing in mind that the representatives had only been elected after some dismissals had taken effect and on the eve of other dismissals, it would not have been practical for further consultation to have taken place. Accordingly, it was not open to the Appellants to criticise the Tribunal decision as to fairness on this ground.
39. Whilst we have some sympathy for the Appellants, who found themselves caught by Section 188 in a form now acknowledged to be unsatisfactory and deficient, we feel driven to accept Mr West's construction of the statute as it was in 1999. Whilst there was plainly a duty on the Respondent to ensure that the dismissals were fair within Part X of ERA 1996, there was, in our judgment, no obligation on the Respondent to initiate or insist upon a process of election for employee representatives as a necessary pre-condition of consultation with the workforce. When the process began, there were no "appropriate representatives of any of the employees", and accordingly it was not possible for the Respondent to consult them. Section 188(7A) in the form in which it applied in May 1999 is plainly self-contained, and only applies where the employer has invited employees to elect employee representatives. This is not the case here, and accordingly sub-section (7A) cannot apply. In our judgment, by the time the employee representatives were elected, consultation as envisaged by Section 188(2) was impracticable, and the time scale envisaged by Section 188(1A) incapable of being put into effect.
40. In our judgment, therefore, Section 188 is inapplicable to these dismissals in the form in which it existed when the dismissals took place.
41. It follows, in our judgment that none of the dismissals can by any stretch of the imagination be described as unfair. In our judgment, the Tribunal reached the right decision, and these appeals will, accordingly, be dismissed.