United Kingdom Employment Appeal Tribunal

Appeal No. UKEAT/0051/11/CEA

 

 

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

 

 

                                                                                                                At the Tribunal

                                                                                                                On 12 April 2011

 

 

 

Before

HIS HONOUR JUDGE SEROTA QC

MR D BLEIMAN

MR J R RIVERS CBE

 

 

 

 

INDEPENDENT INSURANCE CO LTD
(IN PROVISIONAL LIQUIDATION)                                                                    APPELLANT

 

 

 

 

 

 

 

(1) MR J ASPINALL

(2) MRS T O’CALLAGHAN                                                                           RESPONDENTS

 

 

Transcript of Proceedings

 

JUDGMENT

 

 

 

 

 

 

 

 

 

                                              APPEARANCES

 

 

 

 

 

For the Appellant	MR IAN GATT (One of Her Majesty’s Counsel) Instructed by: Herbert Smith LLP Solicitors Exchange House Primrose Street London EC2A 2HS
For the Respondents	Written Submissions

 

 

SUMMARY

REDUNDANCY

Collective consultation and information

Protective award

 

Where an individual claimant seeks a protective award under s188-189 TULRCA the Employment Tribunal only has jurisdiction to make an award in his favour and cannot make an award that benefits other redundant employees.

HIS HONOUR JUDGE SEROTA QC

 

1.            This is an appeal by the Respondent, Independent Insurance Company Limited, which is in provisional liquidation, from a decision of the Employment Tribunal at Manchester presided over by Regional Employment Judge Doyle sitting with lay members.  The Judgment was sent to the parties on 3 March 2010 and there was a written decision of 24 May 2010.  The Respondent sought a review, which was rejected and the original decision was confirmed.  The judgment was sent to the parties on 4 August 2010 and the Reasons on 16 September 2010.

 

2.            The Employment Tribunal decided that in circumstances where sections 188 to 189 of the Trade Union and Labour Relations (Consolidation) Act 1992, known colloquially as TULRCA, applied and as there was no trade union representative nor an elected representative of the employees affected by possible redundancy, one affected employee might seek a protective award not only for himself but for all other persons similarly affected.  I note at the outset that this relief was not referred to in the original Notice of Application and, therefore, was not dealt with in the Respondent’s written submissions to the Tribunal.  Nothing turns on this particular point because the matter was fully argued at the review hearing.  It is, however, relevant to the issue of whether Parliament could have been taken to open the door to this eventuality.

 

3.            The protective award was for 90 days’ remuneration.  There appear to be, in all, 351, possibly a further 9, affected employees.  Only three Claimants made the applications and, as I have said, the Employment Tribunal granted relief not only to them but to some 350 other employees as well.

 

4.            The Employment Tribunal in addition awarded the individual Claimants compensation for breach of contract and unfair dismissal.  Nothing turns on those matters.

 

5.            The matter was originally disposed of under rule 3(7) of the Employment Appeal Tribunal Rules on the sift by HHJ Peter Clark.  However, the matter later came before HHJ Richardson, who determined under rule 3(10) of those rules that there should be a full hearing, which has taken place today, and the hearing should be expedited.  He also gave directions to give notice to possible beneficiaries.

 

6.            Today, the Respondent has appeared by Mr Ian Gatt, to whom we are indebted for his detailed and persuasive skeleton as well as his oral submissions.  There is an irony that will not have escaped the parties and that is that the successful Claimants will be better off if this appeal is allowed because it will mean that there is more money “in the pot” in the liquidation to satisfy their claims.  Of the 350‑odd former employees who might potentially benefit from the decision of the Employment Tribunal, only one beneficiary, Mr Bryan, has expressed an interest in the proceedings.  It is not known if he had brought a claim.  The Claimants, and by that I include Mr Bryan, have not raised any arguments as to the law but we have read such letters as have been sent to the Appeal Tribunal.

 

7.            We now turn to the background facts.  These are, in fact, not controversial.  The Respondent was an insurance company which went into provisional liquidation on 17 June 2001.  It had some 1,550 employees in total, of whom 971 were to be made redundant almost immediately.  The insurance company had, of course, ceased to write any new business.  Of the 971 employees to be made redundant, 351 were in the Respondent’s offices in Cheadle and 9 occupied a nearby office known as North House.  Mr Aspinall and I believe Mrs O’Callaghan worked at Cheadle House.

 

8.            The Respondent, unsurprisingly in view of the immediacy of its closure, failed to comply with its obligations to consult and provide information to either employee representatives or trade union representatives or to arrange for the necessary elections.  Those obligations are set out in sections 188, 188A and 189 of TULRCA: 

 

“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.

(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, and

(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 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 (1A), (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 (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.

(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.

 

188A

(1)The requirements for the election of employee representatives under section 188(1B)(b)(ii) are that–

(a) the employer shall make such arrangements as are reasonably practical to ensure that the election is fair;

(b) the employer shall determine the number of representatives to be elected so that there are sufficient representatives to represent the interests of all the affected employees having regard to the number and classes of those employees;

(c) the employer shall determine whether the affected employees should be represented either by representatives of all the affected employees or by representatives of particular classes of those employees;

(d) before the election the employer shall determine the term of office as employee representatives so that it is of sufficient length to enable information to be given and consultations under section 188 to be completed;

(e) the candidates for election as employee representatives are affected employees on the date of the election;

(f) no affected employee is unreasonably excluded from standing for election;

(g) all affected employees on the date of the election are entitled to vote for employee representatives;

(h) the employees entitled to vote may vote for as many candidates as there are representatives to be elected to represent them or, if there are to be representatives for particular classes of employees, may vote for as many candidates as there are representatives to be elected to represent their particular class of employee;

(i) the election is conducted so as to secure that–

(i) so far as is reasonably practicable, those voting do so in secret, and

(ii) the votes given at the election are accurately counted.

(2)Where, after an election of employee representatives satisfying the requirements of subsection (1) has been held, one of those elected ceases to act as an employee representative and any of those employees are no longer represented, they shall elect another representative by an election satisfying the requirements of subsection (1)(a), (e), (f) and (i).

 

189 Complaint and protective award

(1) Where an employer has failed to comply with a requirement of section 188 or section 188A, a complaint may be presented to an employment tribunal on that ground–

(a) in the case of a failure relating to the election of employee representatives, by any of the affected employees or by any of the employees who have been dismissed as redundant;

(b) in the case of any other failure relating to employee representatives, by any of the employee representatives to whom the failure related,

(c) in the case of failure relating to representatives of a trade union, by the trade union, and

(d) in any other case, by any of the affected employees or by any of the employees who have been dismissed as redundant.

 (1A) If on a complaint under subsection (1) a question arises as to whether or not any employee representative was an appropriate representative for the purposes of section 188, it shall be for the employer to show that the employee representative had the authority to represent the affected employees.

(1B) On a complaint under subsection (1)(a) it shall be for the employer to show that the requirements in section 188A have been satisfied.

(2) If the tribunal finds the complaint well-founded it shall make a declaration to that effect and may also make a protective award.

(3) A protective award is an award in respect of one or more descriptions of employees—

(a) who have been dismissed as redundant, or whom it is proposed to dismiss as redundant, and

(b) in respect of whose dismissal or proposed dismissal the employer has failed to comply with a requirement of section 188,

ordering the employer to pay remuneration for the protected period.

(4) The protected period—

(a) begins with the date on which the first of the dismissals to which the complaint relates takes effect, or the date of the award, whichever is the earlier, and

(b) is 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 any requirement of section 188;

but shall not exceed 90 days. . . .

(5) An industrial tribunal shall not consider a complaint under this section unless it is presented to the tribunal—

(a) before the date on which the last of the dismissals to which the complaint relates  takes effect, or

(b) during the period of three months beginning with that date, or

(c) where the tribunal is satisfied that it was not reasonably practicable for the complaint to be presented during the period of three months, within such further period as it considers reasonable.

(6) If on a complaint under this section a question arises—

(a) whether there were special circumstances which rendered it not reasonably practicable for the employer to comply with any requirement of section 188, or

(b) whether he took all such steps towards compliance with that requirement as were reasonably practicable in those circumstances,

it is for the employer to show that there were and that he did.”

 

9.            I draw particular attention to section 188(1)(b), which defines the appropriate representatives of any affected employees.

 

10.         There is a defence available to employers who can demonstrate there were special circumstances which rendered it not reasonably practical for them to comply with a requirement under section 188.  Section 188A deals with the requirements for the election of employee representatives and section 189 deals with complaints and the making of protective awards.  The point to note about section 189 is that the trade union and elected representatives have separate constituencies, so as to speak.  The trade union effectively represents those persons who are affected employees in respect of whom an independent trade union is recognised by their employer.  It may be, therefore, that a trade union will represent all affected employees but in a large organisation it is likely there will be more than one trade union involved dependent on different classes of employees and possibly different work sections.

 

11.         The constituency of the elected representative is, of course, somewhat broader, but it will depend on how many employee representatives the employer has decided to have elected.  In cases of large numbers of potentially redundant employees, the employer is likely to want to appoint or to have elected representatives for particular classes or sections of employees.

 

12.         The Respondent has maintained that it in fact did make arrangements for the appointment of employee representatives.  This is contrary to the finding of the Employment Tribunal, possibly because the Respondent, for perfectly sensible commercial reasons, chose to submit written submissions to the Employment Tribunal but not to attend the hearing.  It may be, therefore, that it failed to establish the point by default, so as to speak.  Nonetheless, there is no appeal against that finding.

 

13.         On 28 June the High Court permitted certain payments to be made to employees.  On 29 June all 971 employees were made redundant.  At Cheadle, there was no recognised trade union and hence no trade union representative to be informed and consulted.  On the findings of the Employment Tribunal there was no compliance with sections 188 and 188A for the election of employee representatives.  There were thus no employee representatives to be informed and consulted.

 

14.         It followed, therefore, that individuals who were faced with redundancy were entitled to make claims for a protective award under section 189 of TULRCA.  A large number of claims, as we understand it something like 560 from the workforce, were made and stayed by reasons of proceedings involving the liquidation of the company in the Companies Court.  This particular stay was lifted, as we understand it, on 30 July 2009 but on the basis that enforcement of any awards could only take place with the consent of the Companies Court.  Again, we understand from the papers that we have that there were two test cases which held that these claims could only proceed with the consent of the court under section 130(2) of the Insolvency Act.

 

15.         When the application was heard, over 100 other employees had had their claims, including claims for a protective award, either struck out or had settled them.  Approximately 150 had not made a claim and approximately 100 had accepted payment under a settlement that was approved by the Companies Court on 22 August 2008, which included payment of a protective award.  The claimants were the remaining three Claimants plus a Mrs Woollam.  Mr Lappin, who was a claimant, had his complaint dismissed by the Employment Tribunal on withdrawal.  It is interesting to note that one of the anomalies created by the decision of the Employment Tribunal is that Mr Lappin seemingly benefits from the award notwithstanding that his claim was withdrawn and dismissed.

 

16.         We understand from Mr Gatt that a similar claim in the Bristol Employment Tribunal led to an order being made by the Bristol Employment Tribunal which purported to benefit the whole class of affected employees and not simply the individual applicants.  On review but by consent, the Respondent’s contention was accepted and the award limited to the individual applicants.  That case is, therefore, of little authority.  We have seen in the skeleton submissions of the Respondent that there is a different practice or a varying practice in Employment Tribunals over the country.  We have no details of this but it is important, I think, that this case should bring clarity as to what the powers of the Employment Tribunals are when an applicant makes a claim for a protective award when there are other potential applicants who may be entitled to the award who are not before the Tribunal.

 

17.         There is no reference in the originating application to the Claimant seeking an award in respect of employees in a similar situation.  Accordingly, and as the Respondent had no reason to suppose that this was a possible outcome, its ET3 response was limited to raising a section 188(7) defence, that is that it was not reasonably practical for the Respondent to comply with a requirement of the section.

 

18.         We now turn to the decisions of the Employment Tribunal.  The first set of Reasons is dated 23 February 2010.  As I have already mentioned, there was no appearance on behalf of the Respondent and the Claimants, Mr Aspinall and Mrs O’Callaghan, were in person.  Mr Lappin did not attend and was unrepresented.  The Employment Tribunal rejected the defence under section 188(7) but made a protective award which applied to:

 

“All employees employed by the Respondent at its Cheadle office who were dismissed as redundant on 29 June 2001.”  

 

The Respondent was thus ordered to pay such employees remuneration for a protected period of 90 days.

 

19.         The Respondent must have been somewhat surprised that that was the outcome of the hearing and sought a review of the decision of the Employment Tribunal.  As we have said, that review was refused but on that occasion the Employment Tribunal had before it submissions from Ms Rogers of counsel which were of similar effect to those submissions made before us by Mr Ian Gatt today.  The thrust of the submissions were that the Claimants lacked the locus standi to bring what in effect amounted to a representative action on behalf of all persons in the class referred to by the Employment Tribunal.  The Employment Tribunal directed itself by reference to sections 188(1), 188(1)(a), and section 189(1), (2) and (3) of TULRCA.  It was also referred to the authorities of Northgate HR Ltd v Mercy [2007] EWCA Civ 1304 (CA), Nationwide Building Society v Benn & Ors [2010] IRLR 922, and to Transport & General Workers Union v Brauer Coley Ltd [2007] ICR 226.  It rejected the suggestion there was any procedural unfairness (see paragraphs 10 to 11) because the Respondent could have raised the defence of locus standi but did not do so.  I feel somewhat surprised by this because it is difficult to see how the Respondent could have raised a defence to a claim it did not know was being made, but there it is.  The Employment Tribunal considered that the Claimants were more concerned about breaches of section 188A about the election of employee representatives than a failure under section 188 to consult them at all, but the Employment Tribunal was satisfied that both parts of the section had been breached.  Nothing turns on that finding.

 

20.         At paragraph 16, the Employment Tribunal stated:

 

“The Tribunal does not accept that section 189(1) describes what might be termed a ‘representative action’: that is, one that can only be brought by certain persons on behalf of and for the benefit of a wider group.  Section 189(1) simply describes who may bring a complaint of a breach of section 188 and 188A.  It means simply that where there are trade union representatives, they must bring the complaint. Where there are no trade union representatives, but there are elected or appointed representatives, they must bring the complaint.  Where there are neither trade union representatives nor elected or appointed representatives then any other relevant employee may bring the complaint.  A relevant employee is an affected employee or an employee who has been dismissed as redundant. That is the distinction to which the Court of Appeal is referring in Northgate HR Ltd v Mercy [2008] CR 410 at para 15” 

 

21.         The Employment Tribunal went on to say:

 

“17. Once the Tribunal is satisfied that the claimants have the status to bring the complaint, and that the duty to consult has not been complied with, then, if it finds the complaint to be well founded, it shall make a declaration to that effect and it may make a protective award (section 189(2)). 

18. Section 189(3) then defines what a protective award comprises.  It is an award in respect of one or more descriptions of employees who have been dismissed as redundant (etc) and in respect of whose dismissals (etc) the employer has failed to comply with a requirement of section 188.” 

 

22.         At paragraph 19, the Employment Tribunal rejected the submission that it only had jurisdiction to make a protective award in respect of a person who has been dismissed as redundant where a complaint has been proved in respect of that person.  The Employment Tribunal stated that that was not what section 189(3), read in the context of sections 188 to 189, says.  This was contrary to the views expressed by the learned editors of Harvey on Industrial Relations, to which we shall turn shortly, at paragraph 2757.  The Employment Tribunal considered that the commentary in Harvey, based upon the case of Transport & General Workers Union v Brauer Coley, was not supported by that case, which was distinguishable.

 

23.         The Employment Tribunal stated that that is not what the Employment Appeal Tribunal appeared to be stating as a principle in that case:

 

“Trade union representatives can only bring a complaint in respect of affected employees or dismissed employees covered by the collective bargaining unit in question.  The protective award can only extend in such a case to employees covered by the collective bargaining unit, whether they are trade union members or not, and it cannot extend to employees beyond the bargaining unit (in respect of which there might well be other trade union representatives, or appointed or elected representatives, who have separate and exclusive standing to bring a complaint that might lead to a protective award covering employees outside the bargaining unit in question).  It does not appear to the Tribunal that Brauer Coley is an authority for any wider proposition.” 

 

It went on to say that if the Employment Tribunal was precluded of making such an award they would have expected Parliament to have said so in clear terms.

 

24.         At paragraph 22 the Tribunal did not consider it could properly interpret the provisions of sections 188 and 189 by having regard to the practical consequences of the approach to which it feels committed by an orthodox reading of the statutory language:

 

“The Respondent invites the Tribunal to take account of what must have been (or could not have been) Parliament’s intention by reference to practical examples given at paragraph 25 of the skeleton argument.  However, if the wording of the statutory provision is clear and unambiguous, as it appears to the Tribunal to be, it is not for us to divine Parliament’s intention further.” 

 

In his submissions before us, Mr Gatt has persuasively submitted that that approach to construction is seriously flawed.

 

25.         We now turn to the Notice of Appeal and the submissions in support.  The Respondent draws attention to the legal distinctions between the position of elected representatives and trade union representatives on the one hand and individual applicants on the other.  Mr Gatt submitted that there were three relevant matters to be taken into consideration in relation to the Employment Tribunal’s unduly literal interpretation, as it was put, of the statute.  There was the legislative background; there was authority; and there was what he submitted was the correct approach to statutory interpretation.  The essential submission that was made by Mr Gatt was that it was necessary to construe the phrase “description of employee” in the case of an individual claimant as referring to that individual only rather than the entire class of which he was one.  Such a construction, it was submitted, would avoid all the anomalies that arose if the construction favoured by the Employment Tribunal were to be correct.

 

26.         Mr Gatt drew our attention to the legislative background of the provisions to which we have referred.  They are set out in detail in appendix 3 of the skeleton argument and we will not refer to them in detail, but it was submitted that in essence the phrase “award in respect of one or more descriptions of employees” could only apply to those who were or should have been represented by a trade union or were represented by an elected representative.  That was the wording of the statute before the UK complied with its obligation required by the European Directive to include elected employee representatives and there was a later addition extending the right to make application to individuals.

 

27.         When the provision was originally enacted in the Employment Protection Act 1975 to give effect to the Council Directive 75/129, the proceedings could only be brought by a trade union in respect of its constituency, as I have described it, and it was made clear in the statute that the constituency could simply consist of one person only.  We mentioned this because the Employment Tribunal appears to have laid stress on the fact that the statute refers to employees in the plural.  Mr Bleiman, in fact, has had experience of such a case where a trade union was representing a single employee.  When the statute was originally enacted, as we have said, it applied to trade unions only or persons represented by trade unions.  There was no protection offered to other employees and this was extended on two occasions but the language remained the same.  That, submits Mr Gatt, suggests that it was never intended that individuals should have a right to invite a tribunal to impose liability on a respondent for applicants who were not represented by a trade union or an elected representative but who were in pari materia with the applicant.

 

28.         There was no guidance from Parliament because the changes that were introduced were introduced by statutory instrument.  See, for example, the Collective Redundancies and Transfer of Undertakings (Protection of Employment) Regulations.  These were not debated by Parliament because the statutory instrument in question was subject to a negative resolution.  There was no such resolution and no debate on this particular provision.  Mr Gatt submitted it would be a radical change to employment legislation to give an individual claimant the right to bestow a benefit, so as to speak, on other affected employees, thus turning his claim in effect into a representative claim.  He submitted that for statute to do that he would have expected there to be very clear words.

 

29.         We have referred to the decision in Transport & General Workers Union v Brauer Coley.  This was a decision of Burton J and we now turn to that decision, which is reported at [2007] ICR 226.  In that case (and I take these facts from the head note) a recognised trade union in respect of shop floor engineering section employees, made a complaint under section 189(1) of TULRCA for a protective award for employees dismissed as redundant on the grounds that there had been a failure to consult the union.  The Tribunal upheld the complaint and made a direction and protective award in respect of the shop floor engineering section employees.  The trade union, however, submitted that the award should extend to other employees who had been made redundant but in respect of whom the union was not recognised.  This claim was dismissed, a decision upheld on appeal by Burton J on the basis that a trade union could only make a claim under section 189(1)(c) of TULRCA based on a breach of the consultation obligations owed to the union under section 188 in relation to employees of a description in respect of which the union was recognised by the employer.  It was plain from section 189(3) that a protective award could only be made in favour of those employees who had been made redundant and in respect of whom a complaint had been proved under section 189(1)(c) and that accordingly such an award could not extend to other employees whether or not members of the union.

 

30.         The submission that was made to Burton J was in many respects similar to the submission that was evidently made to the Employment Tribunal or represented what the Employment Tribunal in this case considered to be the law.  A trade union can bring a claim for a protective award and succeed in it in respect not only of employees whom it represented or in respect of whom it was recognised but also in respect of other employees who were dismissed on the same day.  It was submitted to Burton J this was not because the union could make such a claim but because the effect of a protective award once obtained by the union can then be accessed by those who have not been before the Tribunal in the proceedings.  That is a very similar if not identical proposition to that evidently accepted by the Employment Tribunal in these proceedings.

 

31.         Burton J characterised the submission as being that once the matter is before the Tribunal the Tribunal is then entitled to make findings of fact and if those findings of fact include or lead to a situation in which the protective award is then made it can be “cashed in” by others who were not before the Tribunal.  This was a submission that was roundly rejected by Burton J.

 

32.         I draw attention to what Burton J had to say at paragraphs 20 to 22:

 

“20.  The fundamental question which underlies this appeal, is in the light of the fact that the Trade  Union  cannot make a claim otherwise than in respect of a breach of a duty with regard to consultation of a Trade  Union  and in respect of those employees whom the Trade  Union  represents, can other employees take advantage of a finding to which on the face of it they are not a party, because they have made no claim?  There could have been on these facts a claim by the Trade Union  in respect of the engineering shop floor representatives and by the individuals, of whom I understand there to be some five, who were also dismissed, but who were not represented by - albeit they may have been members of - the TGWU, in their own names.

21.  What Ms Newton submits is that it is not necessary for the protective award to be limited to those who were Claimants for the protective award.  Once a protective award is made then it should be available to anyone who can benefit from it; and on the face of it that makes good sense, not least for the reason of tidiness.  And, as I earlier indicated, having one vehicle for seeking the protective award, leaving it to individuals then to pursue their separate claims whether directly under the  Union , or collaterally to it, does have the advantage of simplicity.

22.  If that is right, then, in a case where the Trade  Union  brings a claim and seeks a protective award, a Respondent may conclude that only those employees who were dismissed who were represented by the Trade Union are thus making the claim (and may not resist such a claim, whether or not due to insolvency) but not appreciate that the consequence would then be that the Respondent will find itself liable to employees who, on the face of it, were not party to the claim and were not represented by the  Union  at the material time or at all.”

 

33.         Burton J continued at paragraph 26:

 

“I am satisfied that where a claim is made, as it is here, by the Trade Union, that claim must be based upon a breach of the obligation owed to the Trade Union exactly, as it was here, i.e. a breach by reference to s189(1)(c).  There was no allegation of a breach by reference to s189(1)(a) or (b).  Indeed, there could not have been, because this Trade Union could not have made that claim.  The protective award was, in my judgment, plainly made only on the basis of a complaint under s189(1)(c).  Even if the Tribunal had gone beyond its remit, and had made – as I am satisfied they did not – a finding of fact that there had also been no consultation in respect of employees not represented by the Trade Union, in my judgment it would not have been a protective award cashable by the latter group of employees.  S189(1) specifies the various complaints that can be made: on the one hand s189(1)(c) by a Trade Union in respect of failures relating to representatives of the Trade Union, and, on the other, s189(1)(a) and (b) complaints in respect of failures with regard to non‑union recognised employees.”

 

34.         In paragraph 28, Burton J said that if this point had not arisen before it was time for the position to be made clear.  He saw no difficulty in the claim being made simultaneously by a trade union and individual employees.  In the particular case before him there would have been no problem because all five employees were members of the union:

 

“I am satisfied therefore that there are no reasons of practicality to argue against what is, in my view, the clear construction of the statute, which requires that a protective award can only be made in favour of those in respect of whom a complaint of breach has been proved, and the breach in question – if it is a non-Union breach – can only be claimed, and the protection only sought, by the employees themselves.”

 

That would seem to be apposite to the position in the present case.

 

35.         I now turn to consider the paragraph in Harvey at paragraph 2757 to which I have already referred.  It is in these terms:

 

“TULRCA 1992 says that a protective award is ‘an award in respect of …employees ... in respect of whose dismissal or proposed dismissal the employer has failed to comply with a requirement of section 188’ (section 189(3)).  On a purely literal construction, that provision might be read as giving any claimant the right to seek a protective award covering every employee in respect of whom the employer has failed to consult.  But that is not so.  The provision must be read in its context: a personal claimant may obtain a protective award for himself; a representative claimant may obtain a protective award for those whom he represents in the litigation.  So, in the typical case, a trade union may obtain a protective award for all the employees in its bargaining unit (whether they are members of the union or not).  But the award it obtains may not be stretched to cover those outside its bargaining unit, whether the outsiders are members of the union or not, and whether the outsiders are represented by some other person or union or not.  It is a case of each to his own.” 

 

The authority for this is given as the Transport & General Workers Union v Brauer Coley, to which we have referred.

 

36.         The Employment Tribunal rejected the views of Harvey, but in our opinion that is an accurate statement of the law and one which we adopt.

 

37.         The statute confers representative rights.  The employer has a responsibility to consult but we note that in cases where there is no recognised trade union or elected representative the obligation of the employer to consult on what I would describe as section 188 matters is required to be fulfilled by consultations with each individual employee.  There is nothing to suggest that an individual applicant could be considered to represent all other applicants in similar circumstances unless he has been elected.  We draw attention to section 188(7)(b) and section 188(8).

 

38.         Our attention was drawn to the decision of Northgate HR Ltd v Mercy [2008] ICR 410 where the Court of Appeal stressed that a complaint where employee representatives were appointed leads to the complaint being dealt with as a collective rather than individual matter and limits standing, no doubt, so as to prevent the possibility of numerous individual challenges which are not supported by appropriate representatives.

 

39.         Mr Gatt then went on to deal with the correct approach to statutory interpretation.  He drew attention to the importance of construing a statute not simply by reference to its literal meaning but in relation to its context.  He drew our attention to the speech of Lord Blackburn in River Wear Commissioners v Adamson [1877] LR 2 AC 743 at 764:

 

“The golden rule is right, viz, that we are to take the whole statute together, and construe it all together, giving the words their ordinary signification, unless when so applied they produce an inconsistency, or an absurdity or inconvenience so great as to convince the court that the intention could not have been to use them in their ordinary signification, and to justify the court in putting on them some other signification, which though less proper, is one which the court thinks the words will bear.” 

 

40.         Mr Gatt submitted that on the correct interpretation of section 189 there were four gateways to obtain relief by way of a protective award.  There were routes for the elected representatives, the trade union and for the individual, and the gateway determined the remedy.  By virtue of section 189(1) the remedy would bind all members of the constituency even if, as in a case of a shop represented by a trade union where not all employees were members, they would get the benefit of such an award.  They were part of the constituency.  If an individual is a member of a constituency then there is no room for the individual to make a claim.  Such a claim could only be brought by an elected representative or a trade union.  Thus, there is no complaint that can be made if, for example, it is considered by an employee that his trade union representative or elected representative has done a poor job.

 

41.         Mr Gatt drew our attention to support his contention, to section 189(4) of the Act which provides that the protected period begins on the date on which the first of the dismissals to which the complaint relates takes effect and submits that this limits or points to the limitation of the right to claim to the actual complaint that is made.  It would accordingly not be apposite if the complaint was to be regarded as a representative application.

 

42.         If the Employment Tribunal were correct in its construction, there would be little point in dealing with an employee representative or a trade union because any arrangement made could be trumped, so as to speak, by an individual claimant making and succeeding in obtaining a protective award that might be greater than that for which the other parties have settled or stipulated.  Mr Gatt submitted that there is a sufficient disincentive effect so far as an employer is concerned of failing to comply with its obligations to allow the election of employee representatives, by having to face multiple claims.  We were told during the course of submissions, and we have seen reference to this in the evidence, that in the present case over 500 claims were made to 15 separate Employment Tribunals.  I would have thought that is a substantial disincentive if replicated in the case of a solvent company.

 

43.         Mr Gatt then went on to submit that the approach of the Employment Tribunal led to absurdity.  It would bind other employees in the class even if they did not know that a claim was being brought, or if it was being brought by an individual claimant as opposed to the trade union or an elected representative.  It was anomalous because it benefited employees whose claims had been struck out or dismissed or, as has happened in this case, had not made a claim for nine years.  The position of Mr Lappin was particularly pointed to.  If the Employment Tribunal was right, notwithstanding it had dismissed Mr Lappin’s claim, Mr Lappin would get the benefit of the award or the order that was made in respect of the two Claimants.  An employee who was dissatisfied with the manner in which an individual claimant conducted proceedings would have no recourse against him.  The individual claimant would owe no duty whatever to the persons for whose benefit it might be said he was bringing the proceedings, and some of these beneficiaries might not even know about the proceedings at all, let alone know the result, as there was no obligation placed upon him to give any notification to anybody either of the commencement or the termination or the result of those proceedings.

 

44.         Further, the constituency, so as to speak, represented by the individual claimant would be broader than the constituency represented by a trade union, as made clear in the decision of Burton J to which we have referred, and also in relation to the constituency represented by an employee elected representative.  For example, in a case in which there were two separate departments, each of whom was invited to appoint or elect a representative, one department did, the other department did not, but there was a failure on the part of the employer to consult and provide information, the employees in the department which had not elected a representative could not rely upon a finding or an Employment Tribunal could not make an award in respect of the department which had elected a representative that would benefit those in the other department.  It would be similar to the case of the trade union which was only entitled to obtain an award on behalf of the members for whom it was a recognised trade union and not in respect of other members who worked in a part of the respondent business that was not so recognised.

 

45.         Further, Mr Gatt submitted, the employer might wish to advance different arguments in relation to separate categories of employees where there were different numbers involved and different pools.  He has developed this submission in paragraph 62 of his skeleton argument.  It would be anomalous, and indeed impossible in many cases, to require the employer to put forward possible defences to claims under section 188 and 189 when it did not know who the applicants were and what their particular circumstances were.  In the present case, it would be extremely difficult, as every case would be fact sensitive, for the Respondent to have produced its defences across the board, so as to speak, rather than in respect of those who were the original applicants.

 

46.         Mr Gatt suggested that if the decision of the Employment Tribunal was correct it might lead to, although Mr Gatt did not use this language, what might be described as blackmail.  An applicant might say, “Pay me over the odds or I will bring the claim and you will have to make a payment in respect of everybody else as well”.  There is no provision, he submitted, assuming the claim were to be correctly regarded as a representative claim, for case management or for consent to be given by the persons the applicant claimed to represent or benefit.  Finally, it was suggested that because Employment Tribunals across the country do not have an agreed approach to claims such as this, it shows there is an ambiguity in the statute.

 

47.         Mr Gatt then had a further submission in the alternative that the power to make an award was discretionary: section 189(2) uses the term “may”.  Here there was no exercise of discretion by the Employment Tribunal as is apparent from paragraph 3 of its first decision and paragraph 30 of its written Reasons and paragraphs 16 to 22 of its second set of Reasons.  The Employment Tribunal should have had regard to the fact it knew there were over 100 complaints that had been struck out, 150 cases where there had been no complaint and 100 that had been settled.  Even if this was not originally known to the Employment Tribunal it was known at the time of the review and in its discretion the Employment Tribunal should have had regard to those facts and declined to make an award at least in respect of those persons whose claims had been struck out or had benefited by way of a settlement.

 

48.         We now turn to our conclusions.  I do not propose to refer to all of the arguments but I will concentrate on the principal points.  So far as the law is concerned, the statutory architecture of sections 188, 188A and 189 is to give representative rights to trade unions and elected representatives only.  Only they may apply to enforce those rights.  I am told by my lay members that as a matter of practice an employer will negotiate with a trade union representative for everybody in its constituency whether they are members of the trade union or not and similarly with employee representatives.

 

49.         We note the descriptions of the constituencies of the trade union and the employee representatives to which we have referred.  It would be an amazing sea change in the legislation if a right of an individual gave that individual greater representative status than the trade union or the elected representative so that he could effectively make a claim for all persons affected by the redundancy in a wider pool than the constituency represented by the trade union or the elected representative, and that this had been achieved by Parliament without any debate, without the insertion of any provisions for notice or for the election or approval by the class said to have been represented, no procedure provided in respect of potential claimants whose claims had been dismissed, settled or not made.  Mr Gatt submitted that you would expect at least very clear words in the statute to create such a right rather than the opposite as suggested by the Employment Tribunal where clear words should be required to exclude such a right.  This case is a good example of the anomalies that arise if the decision of the Employment Tribunal is correct.  All potential beneficiaries save three have had their claims settled, struck out, dismissed or claims were never made in the nine-year period since the redundancies.

 

50.         We have referred earlier to the relevant statutes.  We have referred to Transport & General Workers Union v Brauer Coley.  If the statute were to be construed as the Employment Tribunal had construed it, there was no reason why in that case the trade union could not have obtained an award for the benefit of the wider class, including those it did not represent.  We are satisfied that Harvey is correct.  We are satisfied that the speech of Lord Blackburn in the River Wear case is apposite and that this statute must be construed in its context and to have regard to the fact that Parliament would not have intended to produce an absurd result.  We do not think that Parliament could have intended these anomalies.

 

51.         If a trade union cannot make a claim in respect of members who are not represented in a particular workplace but are similarly affected, how could an individual without notice to other claimants and the employer and in respect of claimants to whom it owes no duties and has no authority to act and in many cases would be unlikely to know about the claim at all?  In the particular case with which we are faced, it was necessary for the Employment Appeal Tribunal to direct the Respondent to advertise for potential beneficiaries in a newspaper.  Only one came forward.  It would be impossible for an employer to defend proceedings as it might find itself potentially liable to pay an award to all persons affected; in this particular case over 350.  It would be impossible for the employer to consider what defences it might have, for example, in the special circumstances defence, that might arise in relation to different individual employees or groups of employees.  It would be a wholly unprecedented widening of the scope of representative actions without there being any safeguards.

 

52.         The Employment Tribunal, as we have said, was aware at the review of the number of people in Cheadle affected.  It was aware that 100 or so had claims settled, 100 or so had not presented complaints, and I think 100 had accepted payment under the settlement approved by the Companies Court, which included payments for protective awards, and the large number who had not made any claim since 29 June 2001.  The effect of the decision is hopelessly anomalous as we have said because it would enable persons to benefit from the judgment whose cases to which we have referred that have been dismissed, struck out or have not been brought to benefit, even those cases where the employees had failed to establish a breach.  Could it be right, for example, that different applicants in a group can go on raising a claim round the country before different tribunals and different employment judges until one of them hits the jackpot and succeeds, in which case everybody else whose claims may have already failed or been struck out will be able to cash them in, in the language of Burton J.  We find it wholly anomalous that an individual claimant would have greater rights than a trade union or elected representative but no corresponding duties; for example, no obligation to consult with the employer on behalf of his constituency.  Why should anyone settle a case if the liability can be extended by subsequent successful claim by an individual claimant?  The legislative history suggests that it was intended that the right should be limited to those persons who were represented by a trade union or employer only, or to claim in their own right only.  That is the effect of the passage in Harvey to which we have referred and the Transport & General Workers Union case which we have referred to.

 

53.         So far as Mr Gatt’s point on discretion is concerned, it is unnecessary for us to deal with this matter in any detail because of the findings we have made, but we found Mr Gatt’s submissions persuasive and the use of the term “may” clearly gives a discretion to the Employment Tribunal.  It would be impossible to see how if that discretion were judicially exercised it could allow a recovery beyond the cases of the individual applicants in order to avoid the anomalies to which we have referred.