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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Tracy and Others v. Crosville Wales Ltd [1997] UKHL 42; [1997] 4 All ER 449; [1997] 3 WLR 800 (16th October, 1997)
URL: http://www.bailii.org/uk/cases/UKHL/1997/42.html
Cite as: [1997] ICR 862, [1998] AC 167, [1997] 4 All ER 449, [1997] 3 WLR 800, [1997] UKHL 42, [1997] IRLR 691

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Tracy and Others v. Crosville Wales Ltd [1997] UKHL 42; [1997] 4 All ER 449; [1997] 3 WLR 800 (16th October, 1997)

HOUSE OF LORDS

Lord Goff of Chieveley Lord Mackay of Clashfern Lord Lloyd of Berwick
Lord Nolan Lord Clyde

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE

TRACY AND OTHERS (RESPONDENTS)

v.

CROSVILLE WALES LTD.

ON 16 OCTOBER 1997

LORD GOFF OF CHIEVELEY

My Lords,

I have had the advantage of reading a draft of the speech of my noble and learned friend, Lord Nolan. For the reasons he has given, I, too, would dismiss this appeal.

LORD MACKAY OF CLASHFERN

My Lords,

I have had the advantage of reading a draft of the speech of my noble and learned friend, Lord Nolan. For the reasons he has given, I, too, would dismiss this appeal.

LORD LLOYD OF BERWICK

My Lords,

I have had the advantage of reading a draft of the speech of my noble and learned friend, Lord Nolan. For the reasons he has given, I, too, would dismiss this appeal.

LORD NOLAN

My Lords,

This appeal raises the difficult question of the relationship between the provisions of the Employment Protection (Consolidation) Act 1978 concerning the refusal of an employer to re-engage striking employees who have been dismissed, on the one hand, and the provisions under which the compensation payable to unfairly dismissed employees may be reduced by reason of their contributory fault on the other hand. The question is one to which different answers have been given by the Employment Appeal Tribunal in earlier cases. There can, however, be no dispute about the correctness of the view expressed by Mummery J., giving the judgment of the Employment Appeal Tribunal in the present case, when he said: "The points canvassed in this appeal impinge on a socially sensitive, politically controversial and legally uncertain area of industrial relations."

Nor, since the decision of the industrial tribunal, has there been any dispute about the matters of fact which are relevant for the purposes of the appeal. They are admirably summarised in the judgment of Mummery J., and I shall follow the example of the Court of Appeal [1996] I.C.R. 237 in repeating this part of his judgment almost verbatim.

Crosville Wales Ltd., the appellant, employed in its business 119 bus drivers, all members of the Transport & General Workers' Union. In June 1990 a wage review was due. In September 1990 an increase was agreed for the engineering staff, but not for the drivers. On 3 October 1990 the union decided to hold a secret ballot. The ballot held on 8 October 1990 resulted in a majority decision in favour of industrial action short of a strike or strike action.

A union meeting was held on Monday, 23 October. It was decided to operate a ban on overtime working and working on rest days from midnight on Saturday, 27 October. This would have the effect of destroying the Sunday bus routes which were totally reliant on voluntary work from overtime and rest days.

The Divisional Manager, Mr. Ellis-Jones, wrote a letter to all employees on 23 October expressing regret at the decision to implement an overtime ban from Saturday in support of the pay claims. He pointed out that the union representatives were aware of the company's grave financial position and that the company had made the best offer possible. He also stated that the proposed action was in breach of the agreed procedure and was taken before proper negotiations had been concluded. He added that he was particularly concerned about contract work, especially Sundays which, if disrupted, would be reallocated by the county council to the company's competitors. That would result in a loss of jobs at Wrexham, a weaker financial position at the depot and less money for wages. It was conceded by Mr. O'Leary, the union's full-time district officer, that the union had not followed the agreed procedure for the avoidance of disputes contained in Appendix E to the Drivers' Instruction Book. In the event of failure to come to an agreement at depot level, the agreed procedure provided for a meeting between the local representatives, the depot official and local union officer and, if there was failure at that level, provision was made for a meeting between a board member, the full time trade union official and the elected depot representative.

On 25 October there was a joint meeting at Flint of staff and management attended by Mr. O'Leary and other representatives of the employees with representatives of the employers. No agreement was reached. On 27 October the ban on overtime and rest day working began, as threatened. The depot superintendent at Wrexham, Mr. Poole, posted a notice in the garage announcing that an "open forum" had been arranged in the depot canteen for Tuesday, 30 October.

The purpose of the forum was to make sure that everyone was aware of the seriousness of the situation and the possible consequences of continuing the industrial action. During the course of 30 October various events occurred before the meeting. Mr. Wooley, the union's branch secretary, and others went to see Mr. Poole and asked him if he would take down the compulsory Sunday rota which he had issued following the meeting held on 25 October. Mr. Poole refused. Later in the day Mr. Wooley was informed that he, along with others who had attended the earlier meeting with Mr. Poole, were suspended without pay. When the meeting took place in the canteen about 80 per cent. of the drivers were present and there was a mass walk out. On the following day there was a meeting, which lasted only three or four minutes, at which the union representatives asked for a written apology and a withdrawal of the suspensions.

On 1 November Mr. Poole wrote to all employees advising them of the position relating to their decision not to work in accordance with their contracts of employment, and pointing out that each individual employee was in breach of contract and liable to dismissal. He contended that the ballot had not been correctly organised and was invalid and that, in view of the dire financial position of the depot, the company had no option but to require them to return to work by 3 November for normal duty or they would be deemed to have terminated their employment with the company.

The men did not return to work. On 5 November the drivers were dismissed by letter from Mr. Poole. On 13 and 15 November there were further meetings at which the union representatives were told that the effects of the dispute meant that there was no question of taking all the drivers back. The best estimate was that 50/60 would now be required. The company rejected the union's proposal that all the drivers should be taken back and that a redundancy exercise should be carried out. The company then carried out a recruitment exercise for replacement staff by notices at the Wrexham depot, press and local radio announcements and advice to local jobcentres. All the applications were considered whether or not those applying had been involved in the strike action and had been dismissed. Every new employee was offered new terms and conditions of employment in line with the company's final pay offer to those employees who had been dismissed because of industrial action. All the strikers knew that the company was recruiting. They all had an opportunity of obtaining an application form, being interviewed and being considered for re-employment but offers of re-engagement were not made to all of the employees who took part in the industrial action. The final figures were that 25 of those who had been dismissed applied. Those were all offered jobs, but only 22 of them took up the offers.

The strike effectively ended on 23 February 1991 when the Wrexham depot was closed. The drivers at Wrexham were relocated along with the routes at other depots. The company continued to make losses and the Wrexham depot was eventually sold in July 1991.

In the meantime, complaints of unfair dismissal had been made by 73 of the drivers. A preliminary hearing was held on 28 and 29 August 1991 by an industrial tribunal under the chairmanship of Mr. Leo Blair in order to determine whether the tribunal had jurisdiction to hear the complaints.

This procedure was necessary because of the terms of section 62 of the Employment Protection (Consolidation) Act 1978 as amended by the Employment Act 1982. These prohibitions have now been re-enacted in section 238 of the Trade Union and Labour Relations (Consolidation) Act 1992, but I shall refer to the Act of 1978 as amended because this was the statute in force at the time when the events which have given rise to the present case took place. Section 62 provides:

a

b

a

b

sections 57

60

b

c

The preliminary hearing of the industrial tribunal on 28 and 29 August 1991 was concerned, as I have said, with the question whether the tribunal had jurisdiction under section 62(2). The tribunal held that it did have jurisdiction, firstly because they found it difficult to accept that announcements on the radio, and advertisements in newspapers and Job Centres, which were open to all and not solely to the ex-employees of the respondent company, were offers of re-engagement which complied with subsection (4)(c) of section 62. Secondly, and in any event, the tribunal took the view that section 62(4)(c) was not satisfied because the conditions attached to the re-engagement would be inconsistent with it either being the same job as before, or being a reasonably suitable alternative.

Crosville Wales appealed against this decision to the Employment Appeal Tribunal, under the chairmanship of Knox J. On 6 October 1992 the Employment Appeal Tribunal upheld the decision of the industrial tribunal on the first ground, that is on the ground that offers of re-engagement had not been made to the employees. The Employment Appeal Tribunal said:

The matter then returned to the industrial tribunal, this time under the chairmanship of Mr. D.P. Thompson, for a full four-day hearing which began on 19 April 1993. The purpose of this hearing was to give effect to the terms of section 62(3), that is to say to apply the provisions of sections 57 to 60 relating to unfair dismissals as if the references to the reason or principal reason for the dismissal were replaced by references to the reason or principal reason for which the employee had not been offered re-engagement. Before reciting these provisions as thus notionally amended I would refer to section 63. That section provides:

section 57

b

a

b

Section 57 (as notionally reworded by section 62(3) in a case of discriminatory non-engagement and as amended by section 6 of the Employment Act 1980) reads:

a

b

a

b

c

Having heard the evidence and considered the matter in the light of these criteria the industrial tribunal gave judgment on 7 June 1993 upholding the employees' complaints in principle and concluding that the failure of Crosville Wales to re-engage them was unfair.

In paragraph 77 of their judgment the industrial tribunal said:

The industrial tribunal went on to find that these reasons did not comply with section 57(1)(b): they did not fall under any of this specific heads set out in section 57(2), nor did they constitute "some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held." It was therefore unnecessary for the appeal tribunal to consider the meaning of the word "conduct" in section 57(2)(b) and it was also unnecessary for the tribunal to look at the merits of the industrial dispute under the provisions of section 57(3). For unless the employer had complied with the requirements of section 57(1)(b) which Crosville Wales had not, the provisions of section 57(3) relating to the equity and the substantial merits of the case do not come into play.

There was no appeal against that part of the decision of the industrial tribunal. The concluding remarks of the tribunal on the subject of the conduct of the employee to which section 57(2)(b) refers and on the merits of the industrial dispute in relation to section 57(3) are, however, relevant to the issues which have been the subject of appeals to the Employment Appeal Tribunal, the Court of Appeal, and now your Lordships' House.

These issues arise from the contention of Crosville Wales that the compensation to which the employees became entitled in consequence of the decision of the industrial tribunal fell to be reduced on the ground that the conduct of the employees had contributed to their dismissal. By virtue of section 72 of the Act this compensation consisted of a basic award to be calculated in accordance of section 73, and a compensatory award to be calculated in accordance with section 74. Under section 73(3) the basic award is related as a general rule to length of service, though the section also contains a large number of specific provisions governing particular cases such as redundancy. Subject again to specific provision for particular cases, the contributory award under section 74(1) is:

Both sections provide for the compensation to be reduced in the event of a finding of contributory fault on the part of the employee. Section 73(7B), as inserted by section 9 of the Employment Act 1980 and amended by section 4(2) of the Act of 1982 provides:

Section 74(6) provides:

Section 74, but not section 73, is qualified by the provisions of section 74(5) which echo those of section 63, and which reads:

My Lords, I have set out the main relevant statutory provisions in this laborious and painstaking manner because of their bearing upon the principal question raised by this appeal, which may be stated in the following terms:

At the full hearing before the industrial tribunal in April 1993 Mr. McMullen had argued that the answer to the question was plainly "Yes." Participation in the industrial action plainly constituted both conduct and action on the part of the participators. At the same hearing he took his initial stand at an earlier point in the argument, contending on substantially the same grounds that the participation of the complainants in the industrial dispute was "conduct" within the meaning of section 57(2)(b) and in addition was relevant to the determination under section 57(3) of the question whether the employer had acted reasonably or unreasonably. As I have mentioned, however, this contention did not fall to be considered on its merits because of the industrial tribunal's decision that the reason for the complainants' dismissal was not a reason relating to their conduct, was not otherwise within section 57(1)(b) and therefore obviated the need for any inquiry under section 57(3) into the reasonableness of the employer's behaviour. Irrespective of the provisions of section 57(3), the dismissal of the complainants fell to be regarded as unfair because the employer's re-engagement of some but not all of them failed to satisfy the criteria laid down in section 57 and section 62(3). The entitlement of the complainants to compensation was thus established, and there remained the question of contribution. As the industrial tribunal observed in paragraph 82 of their decision "this is where the matter becomes somewhat complicated."

The first complication is that although the complainants' claims for compensation only came into existence because of the selective re-engagement carried out by Crosville Wales, this factor must be ignored in determining whether the compensation should be reduced under section 73(7B) or section 74(6). This was decided by the Employment Appeal Tribunal under the chairmanship of Browne-Wilkinson J. in Courtaulds Northern Spinning Ltd. v. Moosa [1984] I.C.R. 218. That decision was followed by the Employment Appeal Tribunal under the chairmanship of Wood J. In TNT Express (U.K.) Ltd. v. Downes [1994] I.C.R.1, and its correctness has not been challenged before your Lordships. The reason for the decision appears from the following passage in the judgment of Browne-Wilkinson J. in the Courtaulds case, at p. 223. After setting out the terms of section 74(6), and saying that exactly the same considerations applied to section 73(7B), he continued:

reasons

dismissed

My Lords, I find this reasoning compelling, and would adopt it even if it had not been accepted by both parties and by the Court of Appeal in the present case. At the same time, I have much sympathy with the industrial tribunal who said, in paragraph 85 of their judgment:

As it happens, the absurdity of the situation gave rise to no practical difficulties in the present case, because the employer's reasons for the selective re-engagement bore no relation to the conduct of the employees. But it is not difficult to imagine cases in which the two would be closely linked. In the search which your Lordships must make to discover the purpose which Parliament intend to serve by the enactment of section 73(7B) and section 74(6) it is discouraging to have to start from such an unsatisfactory premise.

The second complication is that the question before your Lordships has been answered in opposite senses by two separate divisions of the Employment Appeal Tribunal, each under the chairmanship of a very experienced President, in the Courtaulds [1984] I.C.R. 218 and TNT [1994] I.C.R. 1 cases respectively. The relevant passages in the judgments in both cases are fully set out in the judgment of the Court of Appeal, and it is unnecessary for me to repeat them both in full. I must, however, refer to the passages revealing the point at which they part company, namely, the significance of section 62 of the Act. In the Courtaulds case Browne Wilkinson J. said, at pp. 224-225:

Nelson v. British Broadcasting Corporation (No.2.)

In the TNT case [1994] I.C.R. 1, on the other hand, Wood J. attached no such significance to the enactment of section 62. He said, at pp. 7-8:

Faust's

Later Wood J. added, at pp. 8-9:

Courtaulds Northern Spinning Ltd. v. Moosa

The full hearing before the industrial tribunal in the present case took place after the decision in the Courtaulds case but before the decision in the TNT case. The tribunal accordingly applied the former decision and held that it was not entitled to regard the participation of the complainants in the industrial action as a ground for reducing their compensation. The tribunal added, however, in paragraph 89 of its decision, that if it had been entitled to reduce the compensation on this ground it would have done so by 50 per cent., since the complainants and Crosville Wales were equally to blame.

By the time that the matter came before the Employment Appeal Tribunal the TNT decision had been given. The Employment Appeal Tribunal felt bound to follow this, the more recent decision in preference to the earlier Courtaulds decision. It therefore allowed the appeal of Crosville Wales, and also allowed a cross appeal by the complainants against the 50 per cent. reduction, ordering that this latter issue should be remitted to the industrial tribunal for consideration.

When the matter came before the Court of Appeal [1996] I.C.R. 237, Waite L.J. (himself a former President of the Employment Appeal Tribunal), in a judgment with which Otton and Beldam L.JJ. agreed, approached the matter in this way, at pp. 254-255:

In a later passage Waite L.J. added, at pp. 255-257:

Courtaulds Northern Spinning Ltd. v. Moosa

TNT Express (U.K.) Ltd. v. Downes

Courtaulds

in itself

Courtaulds

TNT Express (U.K.) Ltd v. Downes

Courtaulds Northern Spinning Ltd v. Moosa

Courtaulds

TNT

Courtaulds

Both in his oral submissions and in the written submissions prepared by him and his junior Mr. McMullen has deployed a wide and scholarly range of arguments against these conclusions. If I do not deal with all of them it is not for lack of appreciation but because I cannot, for my part, find in this fragmented and constantly amended legislation a sufficient degree of consistency and logic to merit such a thorough analysis.

Mr. McMullen's most telling argument, to my mind, was that as a matter of plain English the participation of the complainants in the industrial action involved both conduct and action on their part, and therefore brought them squarely within the terms of section 73(7B) and section 74(5). He reminded us of the emphasis placed by your Lordships House in Stock v. Frank Jones (Tipton) Ltd. [1978] 1 W.L.R. 231, a case decided on one of the forerunners to section 62, upon the general principle that where Parliament had expressed itself plainly the courts had no right to depart from the language used. He criticised the formulation by Waite L.J. of the crucial question as

in addition to mere participation in the relevant industrial action

for writing words into the statute which were not there, and which greatly restricted its effect.

Looking more generally at the statutory context he submitted that there was nothing in the terms of section 62 to suggest that the courts were precluded from taking account of particular conduct merely because it consisted of participation in an industrial dispute. That section merely laid the ground for determining whether those dismissed for taking part in such a dispute were entitled to claim, by reason of selective re-employment on the part of the employer, that their dismissal was unfair. Once the jurisdictional position had thus been established, the contention of the employee must be considered by reference to all of the circumstances including, in appropriate cases, the conduct of the employee and the equity and substantial merits of the case, under section 57(2)(b) and (3). The provisions of section 63 expressly required the consideration of any pressure which might have been exercised on the employer to dismiss the employee, if only for the purpose of leaving it out of account. (The same consideration is, of course, required by section 74(5) in the context of possible reduction of the employee's compensatory award by reference to contributory fault). Thus, as Waite L.J. had accepted, at p. 253G-H, the legislature is not in the least squeamish about involving industrial tribunals in the consideration of disputed issues of collective action.

Mr. McMullen acknowledged that attention must be focused upon the conduct of the individual employee in order to determine whether it was blameworthy to a degree which would reduce or eliminate his compensation (a point clearly made in Parker Foundry Ltd. v. Slack [1992] I.C.R. 302 by Woolf L.J., at p. 308A-B, and by Balcombe L.J., at p. 311), but submitted that there was no reason why a number of individuals should not be equally to blame for the same conduct. He referred your Lordships to a passage from the judgment of Lord Denning M.R. in Williams v. National Theatre Board Ltd. [1982] I.C.R. 715 in which, albeit obiter, he had referred to the striking employees collectively as "guilty of most serious misconduct."

Mr. McMullen further submitted that the need to focus upon the conduct of the individual employee who is claiming compensation invalidated the comparison drawn by Waite L.J. between the treatment of those who had been re-employed and those who had not. Waite L.J's point had been, of course, that if A, B, C and D had all taken part in the industrial action, but A and B had been re-engaged while C and D had not, it could not have been the intention of Parliament to penalise C and D who had suffered from the discrimination, while the equally blameworthy A and B had not suffered. But this, submits Mr. McMullen, is no different in principle from the situation in the Parker Foundry case [1992] I.C.R. 302 where two employees had been fighting, where one had been dismissed by the management but the other merely suspended, and where it was held that the compensation claimed by the former could properly be reduced by reference to his conduct alone, irrespective of the degree of blameworthiness which should be attached to the other employee.

My Lords, persuasively as this final submission was put, I cannot accept it. For one thing it oversimplifies the comparison between the present case and the Parker Foundry case. In the Parker Foundry case, for good reason or bad, the management had regarded the other employee as being less culpable than the complainant, but had nonetheless punished him, though to a lesser degree. The issue raised in the case was whether for the purpose of assessing the complainant's compensation claim, the relative merits or demerits of his conduct as compared with that of the other employee should be taken into account and the decision was that it should not. In the present case there is no question of any difference between the relative blameworthiness or non blameworthiness of the employees concerned, A and B on the one hand or C and D on the other. This case, unlike the Parker Foundry case, is concerned with collective activity for which all those involved are equally responsible and for which all were dismissed.

Secondly, Mr. McMullen's argument carries him too far, because if attention is to be focused upon the behaviour of the individual employee alone, the focus must not only exclude the other employees, but also the employer. This was expressly recognised by May J. in Allders International Ltd. v. Parkins [1981] I.R.L.R. 68, a decision referred to with approval by Woolf L.J. in the Parker Foundry case, at p. 310. Taken as a whole, the Parker Foundry judgments appear to me to militate against the arguments of Crosville Wales rather than in their favour. For in the case of collective action by a number of employees against their employer it is surely impossible to judge the blameworthiness or otherwise of a particular employee's conduct without reference to the conduct of the other employees concerned, and to that of the employer.

This does not diminish the force of Mr. McMullen's arguments based upon the plain meaning of the words "conduct" and "action" and the statutory context in which they appear. It may well have been the intention of Parliament throughout that industrial tribunals should not become involved in the merits or de-merits of collective industrial disputes but, as Browne-Wilkinson J. said in the Courtaulds case [1984] I.C.R. 218, 224, "The detailed way in which Parliament sought to achieve this result is not entirely clear." The immediate and apparent purpose of section 62 read by itself is simply to make it plain that an employer who conducts a lockout or who carries out a wholesale dismissal of striking employees is prima facie immune from claims for unfair dismissal. If the matter rested there, then the section would be strong evidence of a legislative intention to keep the merits of industrial disputes out of the courts. But the reintroduction of the concept of unfair dismissal by way of the provisions regulating selective re-employment inevitably involves the possibility of the tribunal having to consider the case of the individual employee in the context of the industrial action and of the employer's conduct in applying the provisions of section 57 as notionally reworded. The difficulty for Crosville Wales in the present case is that when one comes to the final stage of deciding whether the dismissed employees' compensation should be reduced one encounters the first of the complications which I have referred to above: the fairness or unfairness of the selective re-engagement must be ignored. It is at this point, to my mind, and on this fairly narrow ground that the argument for the employer fails, because of the sheer impossibility of the task of allocating the blame for the industrial action to any individual complainant, the more so since the collective blame for the industrial action is shared by those who were re-engaged. I respectfully agree with Waite L.J. that this is a consequence which Parliament can never have contemplated. In order to reach this conclusion it is not, in my judgment, necessary to add any words to those which already appear in the Act. The conclusion simply gives effect to the statutory requirement that any reduction in the compensation of an individual employee should be, and should only be, such as is "just and equitable."

I would accept that a broader approach must be followed at the earlier stage when the tribunal is considering whether, in a case of selective re-engagement, the particular employee has been unfairly dismissed. At that stage, particularly if the employee's conduct comes into the reckoning under section 57(2)(b), it may well be essential to compare the treatment accorded to that employee with the treatment accorded to others, and to have regard to the employer's conduct and to the general merits of the case. But even here I would stop short of accepting that the consideration of the matter by the tribunal must necessarily extend to the collective merits or demerits of the industrial action. The point is not before us and so it would be wrong to attempt to decide it, but one cannot simply brush aside the preponderance of judicial opinion over the last twenty years which has been to the effect stated by Phillips J. in Gallagher v. Wragg [1977] I.C.R. 174, 178:

If that is not the policy of the law it might be argued that Parliament should have taken, or should now take, an opportunity to correct it.

Putting the matter more generally, I agree with the conclusions stated by Waite L.J. on the subject of contributory fault. I agree in particular with the qualification or interpretation which he places upon the Courtaulds judgment in the third of his conclusions. Individual blameworthy conduct additional to or separate from the mere act of participation in industrial action must in principle be capable of amounting to contributory fault.

It follows that I would dismiss the appeal. I would do so, however, with little sense of satisfaction about the justice of the result, or the state of the law which has given rise to it. This was not, after all, a case of deliberate victimisation by the employers, but they are being required to pay just as much compensation as if it had been. I find it difficult to accept that a policy of laissez faire or neutrality must necessarily lead to such a result. This area of the law appears to me one which would benefit from the attention of the Law Commission.

LORD CLYDE

My Lords,

I have had the advantage of reading a draft of the speech of my noble and learned friend, Lord Nolan. For the reasons he has given, I, too, would dismiss this appeal.