United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR PHILIP MEAD (of Counsel) Instructed by: Messrs Wragge & Co Solicitors 55 Colmore Row Birmingham B3 2AS
For the Respondents	MS ELIZABETH HODGETTS (of Counsel) Instructed by: Messrs Rowley Ashworth Solicitors No. 1, Snow Hill Plaza St Chad's Queensway Birmingham B4 6JG

SUMMARY

Redundancy

Protective award – adequacy of reasons (BARKE) – maximum protective award for redundancies where 20 – 99 employees involved – TULRCA s189(4) – vires of s.1 1925/99.


 


HIS HONOUR JUDGE PETER CLARK

1. We have before us two appeals brought by Newage Transmission Ltd ("the Company") against separate decisions made by an Employment Tribunal sitting at Birmingham under the chairmanship of Ms J M Heal. The Respondent to the appeals is the Transport & General Workers Union ("the Union") which was the first Claimant before the Employment Tribunal. There were in addition four individual employees of the Company, members of the Union, ("the employees"), also Claimants before the Tribunal.
2. The first appeal (EAT/0131/05/MAA), which we shall call the reasons appeal, is brought against the Tribunal's first Judgment promulgated with reasons on 28 October 2004 following a Hearing held on 8 September. The second appeal (EAT/0132/05/MAA), which we shall call the remedies appeal, is brought against the Tribunal's second Judgment promulgated with reasons on 19 January 2005 following subsequent Hearings held on 29 November and 17 December 2004. We shall refer to those Judgments of the Tribunal respectively as the first and second Judgments.

The Claims

3. By its application to the Tribunal dated 12 January 2004, the Union, an independent trade union recognised by the Company for the purposes of collective bargaining, brought a complaint under section 189 of the Trade Union & Labour Relations (Consolidation) Act 1992 ("the Act") that the Company had on 13 October 2003 effected in excess of 30 redundancies without carrying out the consultation exercise with the Union required by section 188 of the Act. It claimed a declaration and protective award under section 189(2). The claim was resisted. In addition, the employees brought various individual claims of unfair dismissal, sex discrimination, breach of contract and, in one case, for a protective award. We are not strictly concerned with those claims in these appeals but we shall refer to them as part of the background. Those claims were also resisted by the Company.

The Reasons Appeal

4. In their first Judgment, the Tribunal made a declaration that the Union's complaint under section 189 of the Act was well-founded and adjudicated on the issue of liability in respect of the individual employees' claims, some of which succeeded and some failed, and gave directions for the final disposal of all successful claims. They adjourned those matters to 29 November for a remedies hearing, stating that in respect of the Union's claim the issues included whether a protective award should be made and, if so, what period it should cover.
5. At the first Hearing on 8 September the Company was represented by Mr Lloyd of the Engineering Employers' Federation, presumably the Company's trade association. At the next Hearing held on 29 November, Mr Mead was instructed to appear. The majority of that day was spent negotiating the individual employees' claims which have been resolved. In addition, Mr Mead applied out of time and unsuccessfully for a review of the Tribunal's first Judgment, that application being dismissed without reasons by a Judgment also dated 17 December 2004, (the Review Judgment).
6. On 3 December 2004, the Company lodged the first appeal, dated 26 November. The nature of the complaint in this appeal against the first Judgment (there is no appeal against the Review Judgment) is that the first Judgment failed to give adequate reasons for the section 189 declaration. As Mr Mead correctly submits, section 188 of the Act specifies mandatory requirements with which an employer must comply in order to discharge his statutory obligation to consult over redundancies of 20 or more employees. They are –

"(a) the timeliness of consultation - section 188(1A);

(b) the identity of the appropriate consultee representatives - section 188(1B), including the arrangement of elections when necessary - section 188A(1) and (2);

(c) the purpose or content of consultation - section 188(2);

(d) disclosure in writing of specific information concerning the proposed collective redundancies - section 188(4) and (7B);

(e) how the written disclosure is to be made - section 188(5);

(f) the provision of access to the affected employees and accommodation - section 188(5A)."

7. Mr Mead identifies issues (a), (c) and (d) above as arising in the present case at what may be described as the liability stage, that is, whether or not the complaint under section 189 is well-founded - see section 189(2).
8. In finding in their first Judgment that the Union's section 189 complaint was well-founded, the Tribunal made a number of findings of fact relevant to that conclusion without specifically addressing the statutory requirements which we have listed. However, submits Mr Mead, the Tribunal in that first Judgment made no findings -

"(a) as to the number of employees the Company was proposing to dismiss - see section 188(1);

(b) the date the first of the dismissals took effect - section 188(1A);

(c) whether consultation did or did not begin in good time - section 188(1A);

(d) whether consultation which did take place included consultation about ways of –

(i) avoiding the dismissals;

(ii) reducing the numbers of employees to be dismissed; and

(iii) mitigating the consequences of the dismissals with a view to reaching agreement with the Union - section 188(2);

(e) whether the written disclosure was adequate - section 188(4)."

9. He then accepts that in the second Judgment the Tribunal purported to make good any factual deficiencies in the first Judgment, leading to a concession that, taken together, the two Judgments contained sufficient findings of fact to support the initial conclusion that the Union's complaint was well-founded. However, the reasons appeal posited that this was an impermissible approach by the Tribunal. At this point we should set out the procedural history in the EAT.
10. Under the current EAT Practice Direction, each appeal is sifted on paper by a Judge. The Practice is set out at paragraph 9.5 of the Practice Direction, and at paragraph 9.5.4 provision is made for appeals to be stayed for a specified period, normally 21 days, among other reasons to allow the Tribunal to respond to an invitation from the sifting Judge to clarify, supplement or give its written reasons. This has become known as the Burns Procedure, following the guidance given by Burton P in Burns -v- Consignia (No. 2) [2004] IRLR 425.
11. In the present case, the first appeal was sifted by His Honour Judge Richardson who on 21 December directed that the appeal be stayed for 28 days and the Chairman of The Tribunal, Ms Heal, was invited in consultation with her Lay Member colleagues to say in what respects the Tribunal found the complaint under section 189 was well-founded, i.e. what breaches of section 188 it found proved on the basis of what findings of fact.
12. Following the Tribunal's second Judgment promulgated on 19 January 2005, Silber J on 14 February directed that the stay imposed by Judge Richardson be lifted on the basis that the Tribunal's second Judgment may well be the answer to the grounds of appeal in the reasons appeal. On 10 March 2005, Burton P ordered both appeals to be set down for this full Hearing.
13. The Burns Procedure was considered by the Court of Appeal in Barke -v- Seetec [2005] EWCA Civ 578, 16 May 2005. Giving the judgment of the Court, Lord Justice Dyson considered the approach of Morison, P, in Reuben -v- London Borough of Brent [2000] ICR 102, a case originally relied upon by Mr Mead in his written skeleton argument prepared for the purpose of this appeal before judgment was delivered by the Court of Appeal in Barke. In Rueben, at a preliminary hearing, I had referred a case back to the Employment Tribunal to give further reasons, following the practice sanctioned by Nolan J in Yusuf -v- Aberplace Ltd [1984] ICR 850. At the full Hearing, Morison P deprecated that practice, being of the opinion that an Employment Tribunal having given written reasons for its decision, was functus officio and could not provide or be asked to provide further reasons or explanation for its decision. As a result, the practice of referring cases back to the Tribunal for further reasons fell into disuse until reinstated by the current President.
14. In Barke, Lord Justice Dyson (paragraphs 24 – 28) doubted whether the Tribunal was functus as Mr Justice Morison had held in Reuben. The conclusion of the Court of Appeal was that the Burns Procedure is lawful, contrary to the approach in Reuben, but ought not to be employed where the Tribunal's reasoning is so inadequate that there is a real risk that supplementary reasons will be a reconstruction of proper reasons rather than the unexpressed reasons for the decision (paragraph 46). We shall follow the Court of Appeal guidance in Barke, as Mr Mead accepts we must.
15. Returning to the instant case, Ms Hodgetts, who has appeared for the Union and individual Claimants throughout, submits that the alleged inadequacies in the Tribunal's first Judgment, upheld in the Union's complaint under section 189, overlooks the fact that at the first Hearing the case proceeded on the basis that the number of employees proposed to be dismissed exceeded 30; that it was common ground that the consultation process began on 23 September and that the first of the dismissals took place on 13 October 2003, that is, less than the 30 days provided for in section 188(4). The first Judgment, she submits, was not defective in its reasons. Alternatively, the Tribunal permissibly made good any gaps in their first reasons in their second Judgment reasons.
16. This case, it seems to us, is a paradigm example of the good sense of the Burns Procedure as approved by the Court of Appeal in Barke. In our judgment, the Tribunal did not set out all relevant facts found or agreed, coupled with an analysis of the requirements of section 188. The careful analysis of the individual complaints in the first Judgment did not extend to the Union's complaint under section 189. Ms Hodgetts may be right in saying that the missing facts were not in dispute, but it is desirable for Tribunals to find all relevant facts, whether agreed or disputed, identify the applicable law and explain their reasoning leading to their conclusion. For the avoidance of doubt, the requirement for Tribunals' reasons is now enshrined in the 2004 Employment Tribunal Rules of Procedure, Rule 30(6). That format for reasons should now be firmly ingrained in every Tribunal Chairman's consciousness.
17. However, we are quite satisfied that, taken together, the combined reasons of the Tribunal fully support the conclusion that the union complaint under section 189 was well-founded, as Mr Mead accepts. The Tribunal was entitled to draw on evidence given and concessions made at the first Hearing in order to complete the explicit reasoning process following the second Hearing in their second Judgment. This is not in our view a case of a Tribunal reconstructing the first Judgment reasons on the second occasion; rather, articulating the findings and reasoning which were inchoate in the first set of reasons.
18. In these circumstances, we reject the reasons appeal.

The Remedies Appeal

19. The Tribunal adjourned the issue of remedy, having found the section 189 complaint well-founded, in order to hear the parties' submissions on –

(a) whether a protective award should be made - section 189(2); and, if so,

(b) the length of the protected period.

By their second Judgment, the Tribunal made an 80-day protected award, that is to say, the Company was required to pay 80 days' pay to each employee affected by the protective award.

20. The principal issue before the Tribunal and in this appeal is whether the Tribunal was entitled to make a protective award in excess of 30 days where the number of employees affected was 30 – 35. The relevant legislative history is set out in the leading judgment of Lord Justice Peter Gibson in the Court of Appeal in Susie Radin Ltd -v- GMB & Others [2004] ICR 893, paragraphs 12 – 21. We gratefully adopt that account.
21. Material to the present appeal is an amendment to section 189(4) of the Act effected by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999 (1999 SI 1925) ("the 1999 Regulations") which came into effect on 28 July 1999 and applies to dismissals after 1 November 1999.
22. Prior to the amendment, section 189(4) provided that the protected period should not exceed 90 days for cases in which the employer proposes dismissing 100 or more employees; otherwise 30 days (section 188(1A)). Under section 188, where an employer proposes to dismiss between 20 and 99 employees, the mandatory consultation period is 30 days; for 100 or more employees, it is 90 days. The amendment removed that distinction for the purpose of the protective award, so that section 189(4) now provides that the protective award shall not exceed 90 days.
23. In Susie Radin, the number of employees affected was 108, so that the point now taken by Mr Mead on behalf of the Company did not there arise. In the EAT cases of Transport & General Workers Union -v- Morgan Platts Ltd (in administration) (EAT/0646/02, 10 March 2003, unreported), on which I sat, and Smith -v- Cherry Lewis [2005] IRLR 86, Mr Justice Cox presiding), the number of employees affected was less than 100, the employer was not represented. On both occasions, the EAT, in allowing the union appeals, substituted a 90-day protective award.
24. In Morgan Platts, we declined to determine a point then taken by the Union, that a protective award was punitive rather than compensatory in the absence of argument to the contrary and in view of a line of EAT authority beginning with Talke Fashions Ltd [1977] ICR 833 to the contrary effect. It was unnecessary to do so – see Judgment, paragraph 8. In the event, in Susie Radin the Court of Appeal did resolve the point, disapproving that earlier line of authority. A protective award is punitive not compensatory – see Lord Justice Peter Gibson, paragraph 45(1).
25. The first point taken by Mr Mead in the present appeal is that the amendment to section 189(4), effected by the 1999 Regulations, was ultra vires. The Regulations were purportedly made under section 2(2) of the European Communities Act 1972 ("ECA"). Mr Mead argues that the requirement for a sanction imposed by EC Directive 98/59, amending Directive 75/129, was met by section 188(4) as it appeared before the 1999 amendment. The increased maximum liability of employers proposing to dismiss between 20 and 99 employees from 30 days' pay to 90 days represented a higher liability than was required by the Directive and hence fell outside the Minister's power granted by section 2(2) ECA.
26. We reject that submission. First, we are quite satisfied that the meaning of section 189(4) as amended is clear. The former 30-day limitation was removed, rendering all employers proposing to dismiss 20 or more employees as redundant liable to a maximum protective award of 90 days. Secondly, we accept Ms Hodgetts' submission that section 2(2)(a) ECA entitles the Minister to table secondary legislation "for the purpose of dealing with matters arising out of or related to any European Community obligation." That includes varying a sanction which the UK Parliament is obliged to provide for where the relevant Directive does not determine precisely what that sanction will be. Such variation may be so effected in order to ensure that the required penalty for breach is "effective, proportionate and dissuasive" – see EC Commission -v- Hellenic Republic (Case 68/88) [1989] ECR 2965 at 2985, paragraph 24, ECJ, cited by Lord Justice Peter Gibson in Susie Radin (paragraph 13).
27. That brings us to Mr Mead's second point, proportionality. He submits that if a 90-day maximum protective award is proportionate to an employer's breach of the 90-day consultation period for 100 or more employees, then the same maximum award is disproportionate where the consultation period under section 188(1A) is 30 days.
28. Again, we reject that submission, preferring the approach advanced by Ms Hodgetts. She submits that since a protective award is punitive, not compensatory – see Susie Radin, the question for the Employment Tribunal is the seriousness of the employer's breach. The loss suffered by the employees being a compensatory issue is irrelevant. It may be a relevant factor in assessing the seriousness of the breach, but that is not relevant to the maximum award imposed by Parliament.
29. Mr Mead does not contend that the 80-day award in this case represented a wrong exercise of the Tribunal's discretion, such as to amount to perversity in law. In these circumstances, we shall dismiss the remedies appeal also.
30. Both appeals fail and are dismissed.