At the Tribunal | |
On 5 May 2004 | |
Before
HIS HONOUR JUDGE BIRTLES
MR B V FITZGERALD MBE
MR A HARRIS
APPELLANT | |
(2) MR JAMES PATRICK HILL (3) MR ROBERT VICTOR COOPER (4) MR ROBERT STEVEN LUCAS (5 MR PAUL PLOM (6) MR LEE JOHN DICKENS (7) MR PETER HIGGINS (8) MR ALEC UREN |
RESPONDENTS |
Transcript of Proceedings
JUDGMENT
Revised
Application of sections 188-189 of the Trade Union and Labour Relations (Consolidation) Act 1992 to a sudden close of a plant. Calculation of Protective Award.
HIS HONOUR JUDGE BIRTLES
Introduction
(i) the Applicants' complaints under sections 188 and 188A are well founded and there is to be a protective award pursuant to section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992 in respect of employees dismissed as redundant. By the Respondent, between 16 August 2002 and 31 December 2002 for a protected period beginning on 16 August 2002 for sixty days; the Recoupment Regulations apply to this award;
(ii) The Applicants were unfairly dismissed by the Respondents. A date was fixed for a remedies hearing.
That date has been adjourned pending the outcome of this appeal.
" The Employment Tribunal found the following facts:-
9. The Respondent is a medium sized organisation with approximately 300 employees at various sites in the United Kingdom with an annual turnover of in excess of £60 million. Approximately 60 people worked at the plant at Grays in Essex known as the SAP (Super Absorber Polymer) plant. This is a product used, as its name implies as an absorbent in particular in the production of babies' nappies. The Respondent had one customer for the production resulting from the plant at Grays and that was Procter & Gamble. Other plants at Grays produced other products. Staff were not moved from one plant to another except when a shutdown was occurring.
10. The Respondent had encountered significant difficulties in connection with the production of SAP for Procter & Gamble, in particular when the product had been developed through a number of generations. The plant installed by the Respondent encountered difficulty in meeting adaptations required in order to produce the later generations of product.
11. At the time of cessation of production the Respondent had 10,000 tons of product in stock which, for various reasons, was out of specification either in the context of incorrect size of granule or in the context of retaining excessive quantities of "residuals" which is raw material unconverted as a result of the process. In addition to the massive cost to the Respondent of financing this involuntary stock holding the Respondent was also unable to supply the quantities of product required by Procter & Gamble. There is no doubt that the staff were aware of the difficulties faced by the Respondent in the operation of the SAP Plant in general terms, but there is no indication that the employees of the SAP Plant were aware how close to a terminal event relations with Procter & Gamble were approaching in the summer of 2002.
12. The Respondent and Procter & Gamble had entered agreements in relation to the supply. An agreement was entered on 1 January 2001 and amended on 19 March 2002. Subsequent amendment took place on 1 July 2002. That last amendment specified that the period of the agreement was extended to expire on 30 June 2003 with a further period called "period A" to begin on 1, July 2003 and end on 31 December 2003. However Procter & Gamble had an option to terminate the agreement with immediate effect but no sooner than 1 August 2002 without further obligation if certain requirements were not met.
13. A meeting took place on 7 August 2002 in Geneva between the Respondent's Managing Director and Mr J Carver, Mrs Meads and Mr Patterson and representatives of Procter & Gamble. It was recorded that the production scrap level of 45% in July did not meet agreed minimum requirement of less than 5%. It was recognised that this level of wastage represented a non-economically viable rate for the ongoing operation and increased the cost burden to the Respondent of the out of specification material inventory .It also recorded significant underperformance in relation to committed volume requirements. On that basis Procter & Gamble decided to terminate the supply agreement immediately. Procter & Gamble indicated a willingness to phase out supply in the period to 31 October 2002 to allow reprocessing of material previously out of specification. There was also a willingness to pay a $4million good faith payment. The detail was recorded in a letter dated 13 August 2002 from Mr R Magana, Purchases Director for Procter & Gamble. The letter came from Procter & Gamble's office in Cincinnati, Ohio in the United States.
14. After the decision was communicated orally to the Respondent in Geneva, Mr Carver went to the United States in an attempt to persuade management of Procter & Gamble there to reverse the decision. He was unsuccessful and it appears that confirmation of that lack of success was given in the letter written on 13 August.
15. As a result, Procter & Gamble produced and circulated for signature a "phase out" agreement which was signed on various dates from 21 to 29 August and formally recorded the phase out period as stated in Procter & Gamble's letter of 13 August.
16. The Respondent's senior managers urgently met and took action in relation to the labour commitment. Shortly thereafter, letters were produced dated 15 August 2002 to all the individual employees. They were all told as follows:
"It is with great regret that I have to inform you that your position on the SAP Plant is to be made redundant."
17. The letter went on to give details of meetings at the end of the previous week regarding the cessation of supply to Procter and Gamble and stated that the supply of raw materials would run out on Saturday, that was 17 August, and accordingly the Respondent had no realistic choice other than to cease production of SAP on Friday 16 August. The letter goes on:
"The Company has been made aware of its statutory obligations in relation to carrying out consultation with the affected staff. In brief, there is an obligation to carry out consultation with employees' representatives about proposed redundancies including ways of avoiding dismissals and reducing the number of employees to be dismissed. Consultation should begin with representatives at least 30 days before the first of the dismissals is to take effect.
Regrettably, the speed and critical nature of developments over the last days has meant that the Company has been unable to comply with its consultation obligations. The fact is we have no P & G contract and we cannot continue production beyond tomorrow."
18. The letter went on to record the categories of the 61 employees who made up the workforce on the SAP Plant and also recorded the preliminary view that the company would require around 10 chemists or laboratory technicians, seven process operators, two fitters and one foreman. It also recorded that every effort would be made to get back into specification the huge amount of wasted material presently on the floor of the plant. The letter indicated that supply could continue to P & G up to the end of October and that was the reason for retaining a limited number of staff. It went on:
"Staff to be retained will be offered new contracts with new job specifications, which will reflect the work to be carried out. A key feature of the specifications will be the introduction of greater flexibility in terms of the duties allocated to different jobs. The redundancy situation, which we are facing, is confined to the SAP Plant.
Because the existing production operation ceases from tomorrow, all employees on the SAP Plant are being given notice to terminate their employment. This letter gives you notice of [ ] weeks running from Monday 19 August. You will be required to work out your notice unless you are notified otherwise."
19. The letter went on to explain the employees' redundancy entitlement and indicate that interviews would be held from Monday, that was 19 August, to decide who should be offered the jobs which were to be retained. It stated that the specifications for those jobs "are available today" and also stated that the jobs to be retained were broadly comparable to what the employees were doing at the present time. It also stated:
"All employees will be interviewed for retained posts within their category.
All people being interviewed for a particular post will be asked the same set of questions and scored on their answers to those questions. The scoring system will be explained to you at the interview. The maximum score will be 100 and some points will be allocated/withheld to reflect attendance and punctuality and the absence/existence of a disciplinary record."
20. After dealing with the situation of the electricians, who were not to be included in the interview process, since none were being retained, the letter states:
"Although we have not been able to carry out consultation to date, there will be ongoing consultation throughout the notice period of affected employees. We propose to consult with a representative from each of the affected groups i.e. one of the fitters, one of the process operators, one of the chemists laboratory technicians and one of the foremen. You are invited to nominate (in secret) the person from your group who you would like to represent you. If you wish to take part in this selection, please write the name of the individual you would like to represent you on a piece of paper, place this in a sealed envelope and deliver it to Tracy Griffiths in the office on Monday. Tracy will supply you with an envelope for this purpose. The individual with the most votes will be the elected representative. This person will represent your group for the duration of the consultation process. Consultation is required by statute to include consultation about ways of avoiding the dismissals, reducing the number of employees to be dismissed and mitigating the consequences of dismissal. We will be looking at the existence of any openings elsewhere within the Company. We will be willing to consult about any matters of importance relating to the redundancy process.
If no representatives are elected by you, we shall in any event continue consultation with employees on an individual basis.
If for any reason, you do not feel that any decision in the redundancy process is fair, you may appeal against the decision by setting out in writing to Angela Meads the reasons why you do not think that the decision was fair." .
21. That letter although dated 15 August, was handed to members of two shifts who worked at the SAP Plant during the course of 16 August. Members of the third shift were contacted at home and asked to attend work at 8.30am on Monday morning 19 August where the meeting took place and they were provided with the letters at that time.
22. The company also wrote on 16 August 2002 to the Redundancy Payments Office. We were not told that a form HR1 was completed. However the information required on such a form was written in letter form giving the detail that redundancies were taking place at the Titan Works, Hogg Lane, Grays, Essex. The total number of employees was 297 and 61 were being made redundant. It also stated the earliest day for people to leave was 23 August and the latest date was 20 September 2002. At paragraph 6 the letter says:
"We have started a consultation procedure with ~ the employee representatives. I am enclosing a copy of the redundancy letter being given to employees today."
23. At that time it appears that the Respondent sought to retain ten chemists, seven Process Operators and two fitters, that is 19 out of a staff of 61 on the plant. No thought was given to the length of time for which those jobs were to run. Mrs Meads thought it might be for six months, but subsequent events revealed that those retained were found permanent posts. Mr Plom, the Production Manager, had been informed of the decision to cease production and make all staff redundant on 14 August. It was suggested to him, without any particular force, that if he wished to he could apply for an Operator's position. Mr Plom did not make such an application. A series of interviews were arranged for all the other members of staff.
24. Mr Reeks was interviewed on 19 August, that is the day on which he received this news, at 13.35. Mr Higgins was interviewed at 13.10 on 20 August, that is the following day, Tuesday and Mr Dickens was also interviewed at 14.50 on 20 August. Finally Mr Uren was interviewed at 9.25 on 21 August. The fitters were interviewed on 21 and 22 August. Mr Cooper completed the interview process. He was a Foreman Fitter and did not wish to return to being a fitter. His interview took place at 9.30 on 22 August. Mr Lucas and Mr Hill were scheduled for 8.45 and 9.45 on 22 August but neither of them attended interview.
25. A job description was provided for operators and fitters and although the implication in the letter of 16 August is that copies of that job description would be made available, there was no evidence to suggest that those job descriptions were made available and indeed it appears that it is more likely that they were not since in both the case of the fitters and the operators the questions which it was proposed to ask at interview were set out at the bottom of the job description, and none of the interviewers had notice of the questions to be asked.
26. The interviews were conducted by Mrs Meads and Mr Patterson in connection with the operators, and they were assisted by Mr Dockrill to interview the fitters. There was no consultation with the employees either individually or collectively in connection with the criteria which were, by this method, being applied to identify who was to be retained. Interview questions were drawn up accordingly. In the case of the process operatives, they were scored out of twenty for five questions. The first was designed to identify flexibility of working. The second related to technical knowledge of the plant process. The third question was on personal protective equipment. The fourth concerned forklift truck licence holders, or willingness to train. The fifth was based on attendance records and punctuality. The fitters were asked similar question regarding the general aspects of work and specific technical skills were assessed by Mr Dockrill.
27 There are a number of individual findings to make regarding the process of selection. Mr Plom had been promoted rapidly from joining the Respondent in September 1997. He moved from being a Process Operator to Shift Foreman to Assistant Plant Manager and in 2000 was promoted to Plant Manager. His relationship with the Managing Director deteriorated after he had been Plant Manager for approximately one year and his communication with the Managing Director was through third parties. Mr Plom argued that there should have been pooling operation with the Respondent's other plants on the same site since he considered that his skills and knowledge were comparable to other managers within the organisation. He accepted that he used the words "I understand the situation" when informed about the closure of the SAP Plant stating that he meant this in the context of seeing no point in applying for a position as an operator as this would result in humiliation for himself and the opportunity to the Managing Director to humiliate him even more.
28 Turning then to Mr Hill, he is a fitter and did not want to remain with the Respondent given the circumstances of the redundancy exercise. Mr Cooper was the Foreman Fitter earning £32,000 per year. He was scored down on his interview under the flexibility question with a note made "refused absolutely to scrape floors". The other interviewer indicated "no flexibility, he is a fitter, will not do anything else". We accepted Mr Cooper's evidence that he did not consider it appropriate to have trained as a fitter and work in a plant cleaning floors when other plants nearby required fitting skills. Mr Lucas is also a fitter and did not attend interview.
29 Mr Dickens is an operator. His job primarily involved the receiving of goods and bagging and the loading of lorries. He had worked on a fixed shift undertaking this work for the last two and a half years of his employment. He appears from his interview sheets to have a Forklift Truck and JCB Licence and is trained to operate a "Cherry picker" and is competent in fire protection. He was marked down by one of the interviewers on his technical knowledge which he explained to us on the basis that he had not been working as an operator on the plant for some considerable time. He also lost scores in relation to his attendance as he travels a long way to work and had particular difficulties with his punctuality. He had however significantly improved his attendance in the period under examination by the Respondent.
30 Mr Higgins, as stated, did not give evidence. Mr Uren appears to have lost points in the context of a flexibility question for talking too much and also received 10 points out of 20 under the forklift truck category on the basis that he held no licence but was prepared to take the test. By contrast Mr Reeks on the flexibility question was reported by one interviewer to not mind cleaning, but was marked down with a comment that he was not really very flexible. This may have been because he raised some health and safety concerns. He also received 10 out of 20 on the technical question and zero points because he could not drive a forklift truck. He was not asked whether he was willing to drive a forklift truck or to take a test if possible, notwithstanding the fact that he had recently asked to go on a forklift truck course. He also received 10 out of 20 in respect of his attendance. He was the longest serving operator at the SAP Plant, but that factor was not taken into consideration.
31. On 22 August letters were written to those who were unsuccessful. It was stated:
"We have now completed the interviews and compared the scores achieved. I am sorry to have to tell you that you did not score high enough to be offered one of the retained posts."
32. The unsuccessful employees were then told that they were not required to work their notice and there were no other vacancies within the company for which they could be considered. It appears that contrary to the plans initially envisaged by the Respondent that 40 people would be made redundant, in fact other positions were found so that only 25 had to be made redundant.
33. In relation to the fitters, the scoring produced Mr Johnson and Mr Webster as the two top scorers. Mr Webster indicated that he wou1d prefer the post offered to him to be offered to Mr Olivier on the basis that Mr Olivier was close to retirement age and was unlikely to obtain other employment. The post was then offered to Mr Olivier and he. also turned it down. The next highest score was Mr Cooper who scored 73 as against Mr Olivier and Mr Webster who scored 74. He was made redundant on his indication that he was not interested in a post as a fitter which he disputed, he said in the tribunal hearing. The other four fitters: Mr Ryan, Mr Lucas, Mr Hill and Mr Weeks did not attend interview and were not offered posts.
34. In relation to the process operators, the Respondent initially required 20 individuals and the lowest average score appointed was 85. Subsequently it was decided to take a further three which took the lowest average score appointed down to 77.5. Mr Dickens scored 75; Mr Higgins scored 72.5, as did Mr Uren, and Mr Reeks scored 46.5. We found that at no time were the employees either offered or given sight of the scores which they had achieved and none of the employees made any attempts to challenge the outcome of the decisions made, indicating that their experience of the Respondent suggested that such a challenge would be fruitless. Those are the findings of fact."
"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.
(IA) 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, and
(b) otherwise, at least 30 days,
before the first of the dismissals takes effect.
(IB) For the purposes of this section the appropriate representatives of any affected employees are-
(a) if the employees are of a description in respect of which an independent trade union is recognised by their employer, representatives of the 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).
(2) The consultation shall include consultation about ways of
(a) avoiding the dismissals,
(b) reducing the numbers of employees to be dismissed, and
(c) mitigating the consequences of the dismissals,
and shall be undertaken by the employer with a view to reaching agreement with the appropriate representatives.
(3) In determining how many employees an employer is proposing to dismiss as redundant no account shall be taken of employees in respect of whose proposed dismissals consultation has already begun.
(4) For the purposes of the consultation the employer shall disclose in writing to the appropriate representatives
(a) the reasons for his proposals
(b) the numbers and descriptions of employees whom it is proposed to dismiss as redundant,
(c) the total number of employees of any such description employed by the employer at the establishment in question,
(d) the proposed method of selecting the employees who may be dismissed, ...
(e) the proposed method of carrying out the dismissals, with due regard to any agreed procedure, including the period over which the dismissals are to take effect and
(f) the proposed method of calculating the amount of any redundancy payments to be made (otherwise than in compliance with an obligation imposed by or by virtue of any enactment) to employees who may be dismissed.
(5) That information shall be given to each of the appropriate representatives by being delivered to them], or sent by post to an address notified by them to the employer, or (in the case of representatives of a trade union) sent by post to the union at the address of its head or main office.
(5A) The employer shall allow the appropriate representatives access to the affected employees and shall afford to those representatives such accommodation and other facilities as may be appropriate.
(6) ...
(7) If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with a requirement of subsection [(lA), (2) or (4)], the employer shall take all such steps towards compliance with that requirement as are reasonably practicable in those circumstances.
Where the decision leading to the proposed dismissals is that of a person controlling the employer (directly or indirectly), a failure on the part of that person to provide information to the employer shall not constitute special circumstances rendering it not reasonably practicable for the employer to comply with such a requirement.
7A Where-
(a) the employer has invited any of the affected employees to elect employee representatives, and
(b ) the invitation was issued long enough before the time when the consultation is required by subsection (A)(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.
(7B) If, after the employer has invited affected employees to elect representatives, the affected employees fail to do so within a reasonable time, he shall give to each affected employee the information set out in subsection (4).
(8) This section does not confer any rights on a trade union a representative or an employee except as provided by sections 189 to 192 below."
The Employment Tribunal Decision
Ground One: Protective Award Liability
"50. In the circumstances of this case the Respondent was proposing to make more than 20 employees redundant. The primary obligation is therefore to enter into a period of consultation at least 30 days prior to notice of dismissal being given. Failure to do so entitles affected employees to claim a protective award. In order to avail itself of the section 188(7) defence, special circumstances must be shown that rendered it impracticable for employer to comply with the consultation requirement. As Ms Chambers pointed out the defence must be narrowly construed by the Tribunal as it is not to be found in the directive.
51. In the present case the Tribunal found that, despite the claim by the Respondent that the meetings which took place on 16 and 19 August amounted to consultation, in reality the decision to dismiss had already been made at that stage. The only correct analysis of this case is that no consultation whatsoever took place. Further, it is clear from the letter of 15 August to the employees that the Respondent was aware of the obligation to consult. It accepted that no consultation would take place. The Respondent took, at the time that letter was prepared, a calculated decision that compliance with the obligations in the 1992 regarding collective redundancies was impossible. Individual employees were not provided with the information required to be given in for HR1. The letter records:
"Regrettably the speed and critical nature of developments over the last days has meant that the Company has been unable to comply with its consultation obligations."
52. We therefore considered what we discovered about those developments in the evidence given in this case. It is clear there is no scope for debate about what passed between the. Respondent and Procter & Gamble. The Respondent was told on 7 August that production would cease. However, the Tribunal considered that this falls a long way short of demonstrating the special circumstances envisaged by section 188(7), considered to require demonstration of a catastrophe in reported cases. The gap in the Respondent's evidence relates to the demonstration of those circumstances. To summarise what we know about the Respondent's financial position, we were told that the Respondent had trade debts of £5million, it held stock which it was attempting to realise worth £10million, and had plant which it had purchased at a value of £2 million and a potential receipt of $4 million to be paid by Procter & Gamble, together presumably with a realisation of the stock which it was possible to bring within specification. We were also told that the company's turnover is £62 million per annum, We were given no information about the company's current account position. Mrs Meads told us that the company had to negotiate extended payment terms in relation to raw materials at Euros 50,000 per month.
53. The question for this Tribunal therefore is whether the Respondent has by that information demonstrated that it was not reasonably practicable for it to comply with the obligation to consult its workforce before engaging in a mass redundancy exercise. We note that the reported decisions in this field consider the question of insolvency. Clarks of Hove v The Bakers Union [1978 IRLR 3666] analyses the circumstances in which insolvency visits the Respondent's business, distinguishing between insolvency coming as a sudden disaster and insolvency of which there is prior warning as a result of gradual deterioration in trading. If that critical analysis is possible in relation to the circumstances lying behind an insolvency it is not clear to this Tribunal how it can be said that there are special circumstances with a company which has avoided insolvency, and where the Tribunal is supplied with no information as to the closeness with which impending financial disaster was contemplated.
54. It is clear that in this instance the Respondent reached an entirely commercial decision to cut, at the earliest possible opportunity, all future loss flowing from the SAP Plant. It is also clear that in taking that decision the Respondent discounted, possibly on financial grounds, its obligations under section 188. However, there is simply insufficient information, presumably because none exists, on which this Tribunal could base a finding that those circumstances amounted to special circumstances within the extremely narrow provisions of section 188(7). The expression "not reasonably practicable" has been considered in the context of presentation of applications to Employment Tribunals to be approaching if not actually reaching a test of physical impossibility. The test may be appropriately termed as not reasonably feasible. Whatever the true meaning to be attached to those words, in the present case the Respondent fell far short of providing material to demonstrate that it was not reasonably practicable to consult with the employees. The assumption which lies behind the Respondent's actions is that the cessation of production rendered it not reasonably practicable to consult the workforce. We do not accept that proposition and no consideration appears to have been given by the Respondent the possibility that the workforce should be retained for a period of time during which the Respondent's consultation obligation could operate.
55. Accordingly, we found that this was a case where the Respondent failed to comply with its obligations under section 188 and also under section 188A regarding the appointment of employee representatives. We regarded the Respondent's documentation inviting the appointment of employee representatives to be a sham offering, in the case of those interviewed on a Monday morning, an interval of at most one hour before the first interview was to take place for selection processes. We therefore found that the Respondent's default was significant."
EAT Decision
Ground Two: Special Circumstances
"What, then is meant by 'special circumstances'? Here we come to the crux of the case. In this aspect, also, the decision under the Road Traffic Acts appear to me to be unhelpful. The decisions are too well known to need reference. The basis of them all is probably Whittle v Kirby in 1946. A "special reason" is one special to the facts of the particular case, special to the facts which constitute the offence. A circumstance peculiar to the offender, as distinguished from the offence, is not a special reason'. Insofar as that means that the special circumstances must be relevant to the issue then that would apply equally here, but in these circumstances, the Employment Protection Act, it seems to me that the way in which the phrase was interpreted by the Industrial Tribunal is correct. What they said, in effect, was this, that insolvency is, on its own, neither here nor there. It may be a special circumstance, it may not be a special circumstance. It will depend entirely on the cause of the insolvency whether the circumstances can be described as special or not. If, for example, sudden disaster strikes a company, making it necessary to close the concern, then plainly that would be a matter which was capable of being a special circumstance; and that is so whether the disaster is physical or financial. If the insolvency, however, was merely due to a gradual run-down of the company, as it was in this case, then those are facts on which the Industrial Tribunal can come to the conclusion that the circumstances were not special. In other words, to be special the event must be something out of the ordinary, something uncommon; and that is the meaning of the word 'special' in the context of this Act."
EAT Decision
i) It properly directed itself to examine the Appellant's evidence on the "speed and critical nature of developments over the last days" in deciding whether or not there was sufficient evidence that these developments constituted "special circumstances" such that it was not reasonably practicable to comply with the Appellant's consultation obligations under s.188 of TULRCA 1992 [para 52];
ii) It properly directed itself to look at whether the Appellant's evidence on its financial position demonstrated a sufficiently impending disaster such that the Appellant's burden of proving "special circumstances" was discharged [para 53];
iii) It properly considered whether the Appellant's decision to apparently cut all future financial losses at the "earliest opportunity" by dismissing its employees without consultation was one that rendered it not reasonably feasible to comply with its consultation obligations under section 188 [para 54 ];
iv) It properly considered this case by analogy with the caselaw on situations involving insolvency where there is a distinction between insolvency "coming as a sudden disaster" and insolvency coming with "prior warning as a result of gradual deterioration in trading" [para 53];
v) It properly considered whether the evidence adduced by the Appellant was sufficient to discharge the burden of proof under section 189(6) of TULRCA 1992 [para 54 ].
i) that the Appellant took a "calculated decision" that compliance with its consultation obligations was impossible [para 54].
ii) the Appellant took an "entirely commercial decision" to cut all future losses flowing from the SAP Plant "at the earliest opportunity" [para 54].
iii) That there was simply "insufficient information" to show that this made it "not reasonably practicable" for the Appellant to comply with its consultation obligations [also para 54]"
Ground Three: Perversity
EAT Decision
i) this offer was made in a letter in which Mr Reeks was given notice of termination of his employment. Therefore, the invitation to appoint employee representatives was made after the decision had been taken to dismiss Mr Reeks;
ii) It properly directed itself to look at whether the Appellant's evidence on its financial position demonstrated a sufficiently impending disaster such that the Appellant's burden of proving "special circumstances" was discharged [para 53];
iii) It properly considered whether the Appellant's decision to apparently cut all future financial losses at the "earliest opportunity" by dismissing its employees without consultation was one that rendered it not reasonably feasible to comply with its consultation obligations under section 188 [para 54];
iv) It properly considered this case by analogy with the caselaw on situations involving insolvency where there is a distinction between insolvency "coming as a sudden disaster" and insolvency coming with prior warning as a result of gradual deterioration in trading" [para 53];
v) It properly considered whether the evidence adduced by the Appellant was sufficient to discharge the burden of proof under section 189(6)
Ground Four: Length of Protective Award
"Turning then to the length of the period for the protective award, we operate as is clear from the authority EAT 0646/02 Transport & General Workers Union v Morgan Platts Ltd from the starting point of a 90 day award as provided in section 188. We considered whether there were circumstances rendering it appropriate to reduce that figure of 90 days. We took into account the Respondent's redeployment of almost two-third of the workforce resulting in the redundancy exercise being limited to 25 people. On the other hand we noted that the Respondent was clearly aware of its obligations and decided to ignore them. We considered that in those circumstances it was appropriate to reduce the protective award from 90 days to 60 days. We note that the debate in the authority cited regarding whether the award of a protective award is penal or a compensatory. We considered that an award of 60 days adequately compensates the employees made redundant for the loss of the right to be properly consulted and to have an opportunity to elect representatives to carry out that function. We do not consider that an award of 30 days would be adequate compensation for the loss of that right."
The leading case of Susie Radin Ltd v GMB and Others [2004] IRLR 400 had not been handed down until after the Employment Tribunal Decision. However we must now apply it. At paragraph 45 of the judgment, Peter Gibson LJ gave this guidance to Employment Tribunals:
" I suggest that ETs, in deciding in the exercise of their discretion whether to make a protective award and for what period, should have the following matters in mind:
(1) The purpose of the award is to provide a sanction for breach by the employer of the obligations in s. 188: it is not to compensate the employees for loss which they have suffered in consequence of the breach.
(2) The ET have a wide discretion to do what is just and equitable in all the circumstances, but the focus should be on the seriousness of the employer's default.
(3) The default may vary in seriousness from the technical to a complete failure to provide any of the required information and to consult.
(4) The deliberateness of the failure may be relevant, as may the availability to the employer of legal advice about his obligations under s. I88.
(5) How the ET assesses the length of the protected period is a matter for the ET, but a proper approach in a case where there has been no consultation is to start with the maximum period and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the ET consider appropriate."
In that case the Court of Appeal upheld the decision of an Employment Tribunal to make a protective award for the maximum period of ninety days in respect of the employer's failure to consult with the union over a proposal to close the factory and dismiss all employees as redundant, notwithstanding the Tribunal's finding in relation to the employees' claims of unfair dismissal that, in those circumstances, consultation would have been futile.
(i) That it misinterpreted the "special circumstances" defence;
(ii) That it misconstrued the letter inviting the appointment of representatives of 15 August 2003, and therefore arrived at an incorrect conclusion that this was a sham consultation process. He submits that that vitiates the proper exercise of the Tribunal's discretion in choosing sixty days.
EAT Decision
Ground Five: Unfair Dismissal
"57. We turn then to the unfair dismissal claims brought in this case. We note Ms Chambers' submission sets out the criteria identified in Williams v Compair Maxam:-
(i) the employer must warn at the earliest opportunity;
(ii) the employer must consult, including about the selection criteria for the retained positions;
(iii) the employer must use selection criteria which are fair, reasonable and capable of objective checking;
(iv} the employer should reveal the assessment scores and give employees the opportunity to challenge those scores;
(v) the employer should look at the reasons behind answers given at interview e.g. reasons for absences;
(vi) the employer should consider the total pool of employees rather than isolating certain employees for redundancy;
(vii) voluntary redundancy should be sought.
58. We deal with the question of the total pool of employees first. We did not accept the Applicants' submissions that other employees in other plants should have been pooled with the Applicants. We entirely accept that it was the SAP Plant where posts were made redundant, It was the SAP Plant where the individuals concerned worked and we did not consider that it was realistic to select for redundancy employees on other plants. While we accepted that the SAP employees worked on other plants from to time during periods of shutdown, we found no signs of general interoperability between this plant and the Respondent's other plants. Indeed, if anything the contrary was the case and the operatives from the SAP Plant were, to an extent, more highly qualified than those on the other plants.
59. Having dealt with that factor, the other instance where the Respondent might be considered to have attempted compliance with the factors in Compair Maxam relate to using selection criteria which are fair, reasonable and capable of objective checking. We note the Respondent's attempts in this context. We note that it is very difficult to define an entirely objective set of criteria. However, we considered that the criteria adopted in this case tended excessively towards the subjective and bore all the hallmarks of a set of criteria created and defined by an employer acting unilaterally without the consideration involved in consultation and negotiation of those criteria.
60. Aside from that issue, we found that the Respondent failed completely in respect of the other criteria set out in Compair Maxam. The Respondent failed to warn, did not seek volunteers, failed to consult about the selection criteria but instead informed the employees of dismissal as a first step. The Respondent failed to reveal the assessment scores and give the employees the opportunity to challenge those scores. It is not clear whether the Respondent looked at the reasons behind answers given at interview, particularly reasons for absences. The right of appeal contained in the letters expressly provided that the appeal should be made to one of those making the scores. It was said on behalf of the Respondent that it is not a necessary implication that the appeal would be determined by Mrs Meads, but we found that to be the practical effect of the right of appeal offered to the Applicants.
61. Taken all in all, and without in any sense following slavishly the provisions of Compair Maxam, we consider that the Respondent's deficiencies in this context were so significant as to render it impossible to find the dismissals in this case fair. We remind ourselves that section 98 of the Employment Rights Act 1996 provides for the Respondent to show that the reason for dismissal is potentially fair. There is no issue in this case that there was a redundancy situation and that is a potentially fair reason. However, in applying the section 98(4) fairness test, we have to consider with a neutral burden of proof whether the Respondent acted reasonably in treating the reasons shown as sufficient to justify dismissal. It is in that context that the Compair Maxam guidelines are relevant. We found that the selection process established by the Respondent failed to meet those guidelines or even approach the standard envisaged in individual let alone collective redundancies.
62. We also considered in accordance with the authority of AKZO Coatings plc v S W Thompson and others EAT 1117/94 and 1037/95, whether it was possible to apply a lower threshold in this case on the basis that the employees were not being selected for redundancy but rather were being offered new posts with new job descriptions. Despite the terms of the Respondent's letter of 15 August, we consider that that was not the true and correct analysis in this case. This is not a point which was pleaded by the Respondent in the Notice of Appearance and not a point that sits easily with the facts. This is therefore a case where the Respondent operated in extreme haste and without any contact with those to be made redundant, or representatives on their behalf, in taking action to bring their employment to an end. We considered that in each case that was unfair.
63. We considered the provisions of Polkey and we also considered the issues of contribution. We did not find that the individual employees took any steps that could be considered culpable in the context of a reduction of an award of compensation for unfair dismissal. It may be that there are individual points regarding the approach taken to the selection process that will have to be further considered under a general "just and equitable" heading at the time of the remedy hearing in this case but we find it inappropriate to make any deductions for contribution. Similarly, given the nature of our criticisms of the redundancy selection process, we found no basis for saying that there was an identifiable prospect that fair dismissals would have resulted from a fair redundancy selection "
dealt with the issues and their finding was a permissible option.
Conclusion