United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR PETER EDWARDS (of Counsel) Messrs Rowley Ashworth Solicitors Kennedy Tower St Chads Queensway Birmingham B4 6JG
For the Respondent	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE RESPONDENT


 


HIS HONOUR JUDGE PETER CLARK

1. This is an appeal by the Appellant trade union against the Birmingham Employment Tribunal's order for a protective award under Section 189 of the Trade Union Labour Relations (Consolidation) Act 1992 (the Act) made against the Respondent company, in administration, by a decision with Extended Reasons promulgated on 12 February 2002.
2. It is important to note that the Respondent neither appeared before the Employment Tribunal nor before us. It follows that we have heard no argument in opposition to that presented by Mr Peter Edwards on behalf of the Appellant. The significance of that imbalance will become clear later in this judgment.
3. First, the facts. The Appellant, an independent trade union, was recognised by the Company, Morgan Platts Ltd, for collective bargaining purposes. For some time the Company was experiencing financial problems such that, unusually, the workforce had received no wage increases for five years. However, at no time did the Company have any formal discussions with the Appellant about the nature and extent of these problems, or their effect on the employees. Indeed, production was in full flow, with employees working regular overtime and forgoing their holidays. Then, without any prior warning, on 26 February 2001 the Company was granted an administration order and on the next day the joint administrators informed some 35 employees that their employment was terminated with immediate effect. Only one week earlier Mr Shutt of the union had met with the Company's Operations Manager to discuss the need for improved productivity and efficiency with no mention of impending administration. By the time Mr Shutt came to hear of the dismissals and requested a meeting on 27 February, those dismissals had taken effect. There was, accordingly, no prior consultation with the recognised trade union before these redundancy dismissals took effect.
4. In these circumstances the union presented an Originating Application to the Tribunal seeking a protective award under Sections 188 and 189 of the Act. The Tribunal found that there had been no consultation with the trade union for the purposes of Section 188(1) of the Act and no special circumstances rendering it not reasonably practicable to consult over these redundancy dismissals had been made out (Section 188(7)). Accordingly, the Tribunal made a declaration that the complaint was made out and determined also to make a protective award (Section 189(2)). It is the period of the award, 30 days, which is the subject of this appeal.
5. Material to the first way in which Mr Edwards puts this appeal is the amendment to Section 189(4) of the Act, effected by the collective Redundancies and Transfer of Undertakings (Protection of Employment) Amendment Regulations (1999) SI 1999/1925, which came into effect on 28 July 1999, applying to dismissals taking effect on or after the
   1 November 1999 (the relevant amendment). It follows that Section 189(4), as amended, applies in this case, where the dismissals took effect on 27 February 2001.
6. Both before and after the relevant amendment Section 188(1A) provides:

"The consultation shall begin in good time and in any event –

(a) where the employer is proposing to dismiss 100 or more employees … at least 90 days and

(b) otherwise, at least 30 days, before the first of the dismissals takes effect."

Prior to the relevant amendment those respective periods were reflected in the protected period provided for in Section 189(4). Thus, where, as in the present case, more than 20 but less than 100 employees were dismissed, the maximum protective award was for a period of 30 days; where 100 or more employees were dismissed the maximum protective award was 90 days. The effect of the relevant amendment was to provide for a maximum protected award period of 90 days in all cases where at least 20 employees were dismissed.

7. Mr Edwards submits that the equalisation of the maximum protective award now makes clear that such awards represent a penalty on employers who fail to comply with their statutory obligation to consult with the recognised trade union as opposed to being a compensatory award, contrary to earlier Employment Appeal Tribunal authority. He invites us to depart from those authorities, see eg Talke Fashions Ltd v ASTWKT [1977] IRLR 309; Spillers-French (Holdings) Ltd v USDAW [1979] IRLR 339; Sovereign Distribution Services Ltd v TGWU [1989] IRLR 334. That argument was advanced and rejected by the Employment Tribunal below.
8. Having listened to Mr Edwards' submissions we put this proposition to him. That it was undesirable for the Employment Appeal Tribunal to reject an earlier body of its own case-law in the absence of argument to the contrary where it was unnecessary to do so given that his alternative case on appeal, to which we shall shortly come, if accepted, would determine the appeal in the Appellant's favour. Without in any way conceding his first argument, Mr Edwards was content to win by his second route. We therefore turn to that second argument.
9. It is this. Assuming, for the purposes of the alternative submission, that a protective award is compensatory and not penal, the Employment Tribunal nevertheless fell into error in limiting the protective award in this case to 30 days in the following circumstances:

(1) Section 189(4)(b) of the Act as amended provides that the protected period shall be 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 the duty to consult under Section 188 (subject to a maximum of 90 days).

(2) The particular factor to be taken into account is the seriousness of the employer's default. In this case the Tribunal found that the default was so serious that it deprived the employees wholly of their rights. If the employees are to be compensated it is for the loss of their right to have their union consulted, not their loss of earnings, if any, arising from the dismissal – see Spillers-French.

(3) Where the Tribunal went wrong in law was to impermissibly fetter their discretion by looking to the 30 day minimum consultation period provided for in Section 188(1A)(b) as the starting point, and then to decide whether there were "special reasons" (see paragraph 17 of the Tribunal's reasons) for departing from that starting point. There is no warrant in the legislation for a "special reasons" approach and the 30 day starting point conflicts with earlier decided Employment Appeal Tribunal decisions. For example, in GMB v Rankin & Harrison [1992] IRLR 514, paragraph 8, Lord Coulsfield, giving the judgment of the Employment Appeal Tribunal in that case, accepted a submission on the part of the Appellant union that the starting point was the maximum period of 90 days for the protective award and then to consider whether there was any circumstances to justify reducing it. In the present case, submits Mr Edwards, the Employment Tribunal found that the Respondent was in serious default; there had been no consultation at all; there were therefore no circumstances to reduce that period.

10. We accept those submissions. It seems to us that the Tribunal took a wrong approach in law and took into account an irrelevant factor, namely whether there were special reasons for departing from their 30 day starting point (itself an erroneous position to take). In these circumstances we shall allow this appeal and set aside the Tribunal's award. All relevant findings of primary fact having been made by the Tribunal, we shall exercise our powers under Section 35(1) of the Employment Tribunal's Act 1996 and, for the reasons advanced by Mr Edwards, substitute a protective award for the period of 90 days.