United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR THOMAS KIBLING (Of Counsel) Instructed by: Vauxhall Motors Legal Services Mail Point Griffin House Osborne Road Luton LU1 3YT
For the Respondent	MS SUSAN MACHIN (Of Counsel) Instructed by: Messrs Thornleys Solicitors 8 Warrington Street Ashton under Lyme Lancashire OL6 6XP

SUMMARY

19D - Redundancy – collective consultation and information

Section 188 TULRCA compliance – whether point reached where fresh section 188 compliance is required.


 


HIS HONOUR JUDGE PETER CLARK

1. This is an appeal by Vauxhall Motors Ltd (the Company) against the Judgment of an Employment Tribunal sitting at Liverpool, promulgated with reasons on 9 June 2005, upholding the complaint of the Transport & General Workers Union (the union) brought under section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992 (the Act) and ordering a protective award reflecting 70 days pay to each of the affected employees.

Background

2. The Company manufactures cars at its Ellesmore Port plant. It recognizes the union, together with Amicus, for collective bargaining purposes. Communication takes place through the Joint Plant Committee (JPC) and Joint Negotiating Committee (JNC).
3. Section 188(1) of the Act provides that:

"(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, it shall consult about the dismissals…"

In this case, the recognized trade unions, representing the employees who may be affected by those dismissals. That consultation shall begin in good time and, in any event, where it is proposed to dismiss 100 or more employees, at least 90 days before the first of those dismissals takes place. (Section 188(1A)). Consultation includes consultation about ways of avoiding the dismissals, reducing the number of employees to be dismissed and mitigating the consequences of the dismissals. (Section 188(2)). Section 188(4) requires the employer to disclose to the union certain information there set out for the purposes of the consultation.

4. Section 192 of the Act requires the employer proposing to dismiss as redundant one hundred or more employees within a period of 90 days or less to notify the Secretary of State for the Department of Trade and Industry of his proposals at least 90 days before the first of those dismissals takes place. That notice is, in practice provided by completing and sending to the Department its form HR1. Section 193(6) also requires the employer to provide a copy of the form HR1 to the relevant union. A breach of section 193 gives rise to a criminal offence under section 194.
5. Pursuant to the Company's statutory obligations set out above, Mr Walsh, their Personnel Services Manager, on 24 January 2003, sent a completed form HR1 to the Redundancy Payments Office of the DTI and on the same day wrote to the union, enclosing a copy of that Form and setting out the statutory information required by section 188(4).
6. The notification, both to the Department and to the Union, related to the proposed redundancies of just over 400 production operators and skilled maintenance operators then engaged on 12 month Fixed Term contracts to cover a period of high production during 2002 (the temporary employees). The first redundancy was proposed to take effect on 25 April 2003 and the last on 5 September 2003.
7. From February 2003 a series of consultation discussions took place through the JPC and JNC. That consultation proved effective to the extent that the contracts of the temporary workers were extended with the result that no relevant redundancies were declared during 2003.
8. On 11 March 2004 the Company, without informing the union, applied to the DTI for an extension to the HR1 registered on 24 January 2003. That extension appears to have been granted.
9. On 23 September 2004, at a JNC meeting, Mr Millward, the Employee Relations Director and Personnel Manager, was asked about the position of the temporary employees. He asserted that there was not a redundancy situation in respect of them; there were to be no compulsory redundancies. That legal analysis, as Mr Kibling concedes, was incorrect.
10. On 27 September 2004, four days later, Mr Walsh wrote to Mrs Head of the Redundancy Payments Service. In that letter he pointed out that in March 2004 the Service extended the HR1 for 6 months but had indicated that no further extensions would be permitted. He stated that planned termination dates for the temporary employees was, by agreement with the Unions, extended to 22 October to allow for further consultation.
11. With that letter Mr Walsh lodged a new HR1 of even date. Some 345 potential redundancies were identified, between 22 October 2004 and 30 September 2005.
12. On this occasion, unlike January 2003, a copy form HR1 was not given to the union. Again Mr Kibling accepts that as a matter of good industrial relations practice and in accordance with section 193, but not section 188 of the Act, it ought to have been sent.
13. On 14 October 2004 GM Europe, of which the Company is a part, announced large redundancies. Ellesmere Port's headcount was to be reduced by 350.
14. In November 2004 the trade union side argued that by now 46 remaining temporary employees should be joined with 341 other employees affected by the proposed restructuring. The Company disagreed. The 46 temporary employees relevant to this claim were dismissed on 26 November 2004.

The Tribunal's conclusions

15. At paragraph 5 of their reasons the Tribunal summarized the rival contentions advanced by the parties. It is plain that central to those arguments was this issue; was the Company entitled to rely on the statutory information provided to the union in January 2003, which Ms Machin accepts complied with the requirements of section 188(4), in relation to the dismissal of the 46 temporary employees in November 2004? The Company answer yes; the union says no.
16. In short, the Tribunal accepted the union position. At paragraph 6.2 they said this:

"6.2 As to the question was there a breach of Section 188? In the Tribunal's view a redundancy situation cannot be an on-going piece of elastic as the respondent would wish it in this case. We have specifically considered Section 188(1) which is set out above, and which speaks of "a proposal to dismiss within a period of 90 days or less". We do not accept the submission of the respondents that Section 188 offers an "unlimited shelf-life.""

17. The Tribunal went on to find that the relevant date for their consideration of the Company's section 188 obligations was 27 September 2004, when the second HR1 was sent to the Redundancy Payments Office. Thereafter they found there was not meaningful consultation; the Company did not engage with the union's request for the remaining 46 temporary employees to be treated as part of the larger restructuring exercise; the mandatory information required by section 188(4) was not provided to the union; there was also a breach of section 188(5) requiring that information to be sent by post to the union.
18. Having found the Company to be in breach of its section 188 obligations they ordered a 70 day protective award in favour of the 46 dismissed temporary employees.

The Appeal

19. Mr Kibling attacks both the finding of breach and in the alternative the extent of the protective award. He takes a number of points, however the argument before us turned on what we have described as the central issue before the Employment Tribunal. We found it convenient to consider that question first, leaving over further argument as to the size of the protective award if necessary.
20. The first point of construction to be made is that a clear distinction must be drawn between the requirements of section 188 vis-à-vis Company/Union and the requirements of the Company vis-à-vis the Department under section 193. We think that the Tribunal did not have that distinction in mind, not least because in setting out the law to be applied, at paragraph 2 of their reasons, no mention is made of section 193. Curiously, although section 193(6) requires the employer to provide a copy of the form HR1 to the union, section 188 does not include that same requirement. The focus of the Tribunal, on a section 189 complaint, must be on the section 188 requirements.
21. We return to the Tribunal's piece of elastic. Given that it is common ground that the statutory information required by section 188(4) was properly given to the union in January 2003 (and the company also complied with a section 193 duty owed to the Department by completing the form HR1 and sending a copy to the union) did their come a point on the particular facts of this case when section 188 compliance was spent?
22. We agree with the Tribunal that section 188 does not provide an unlimited shelf-life. Take this example, raised with counsel in argument. A company, in grave business difficulties, serves a section 188(4) letter on the union. Consultation follows and, before any dismissals take effect, a large order comes in obviating the need for redundancies. All employees are required in order to fulfil it. At that point consultation ceases. A year later the order is fulfilled, there is nothing to replace it, again the employer looks at the prospect of redundancies. At the point when a fresh proposal of redundancies arises it seems to us that a fresh section 188 consultation round is required. The original section 188 notice is spent.
23. However, the facts of the present case, as found by the Tribunal, paint a quite different picture. Here, as the Tribunal found at paragraph 4.7 of their Reasons, an on-going dialogue about the status, extension and transfer of the temporary employees took place through the JPC and JNC from February 2003 up to the eventual relevant dismissals on 26 November 2004. It had precisely the effect envisaged by section 188(2). First there were extensions of the temporary employees' fixed-term contracts; on 29 September 2004 twelve out of the then 58 remaining temporary employees were moved to permanent positions. The crunch then came in relation to the remaining 46. The Company would not accede to the union's request that they be joined with the 341 permanent employees in the forthcoming restructuring exercise.
24. Ms Machin submits that the Company's position as to those remaining 46 amounted to a substantial change, entitling the Tribunal to conclude that a fresh section 188 process was thereby triggered. We disagree. It seems to us that the entire consultation process from January 2003 until November 2004 continued seamlessly. The elastic did not break.
25. We were troubled by the reference to 90 days in section 188. If the process of consultation extended beyond that period, did that mean it must re-start statutorily? We think not. The 90 day period fixes the start of consultation. It does not determine when it finishes – provided that consultation deals with the same employees and the same prospective redundancies, we see no grounds for declaring the employer to be in section 188.
26. In our judgment the Tribunal misdirected itself by focusing on the second Form HR1. As Mr Kibling points out, section 193(4)(c) gives the Secretary of State a wide discretion as to the information required of the employer. If Mrs Head, or her colleagues required the Company to serve a second Form HR1, so be it. That is immaterial to the question as to whether the Company was in breach of section 188.
27. In these circumstances we have concluded that the Tribunal materially misdirected themselves in law. Having complied with their section 188 duty in January 2003, on the particular facts of this case (not materially in dispute) what followed right up until the dismissals in November 2004 was precisely the sort of meaningful and effective consultation envisaged by the legislation and the underlying European Directive.
28. Accordingly we shall allow this appeal and set aside both the Tribunal's declaration that the company failed to comply with the requirements of section 188 and the consequent protective award. It is therefore unnecessary to hear further argument on the size of that award.