Mr A Doughty and others v Phones 4U Ltd (in Administration) and others: 1306072/2014
EMPLOYMENT TRIBUNALS
Case No 1306072/2014
Between
Mr A Doughty and othersClaimantPhones 4U Ltd (in Administration) and othersRespondent
Before
Employment Judge LloydIn person for claimantDate 11 January 2017
REASONS
[1]The claimants pursue claims for protective awards only. The second respondent (SoS) has previously received claims from former employees of the first respondent (P4U) and payments have been made from the National Insurance Fund in respect of various claims including redundancy pay, compensatory notice pay, arrears of wages and holiday pay.[2]P4U was a business engaged in the selling of mobile phone network connections, handsets, accessories and mobile phone insurance to retail customers. P4U entered into administration on 15 September 2014. On 19 September 2014 623 employees were made redundant from Head Office. On 22 September 2014 1,683 employees were made redundant from retail stores, including 21 at the Merry Hill Shopping Centre store (“Merry Hill”). The remaining employees in this action were made redundant on various dates up to 8 December 2014; thus within a period of 90 days.[3]A large number of other redundancies were then made between 30 September 2014 and 9 March 2015.[4]A list of redundancy dates prepared by the first respondent’s administrators is at Part 3 of the Annex hereto.[5]At a preliminary hearing held on 25-28 April 2016 before Employment Judge Findlay, it was decided that P4U was proposing to dismiss as redundant 20 or more staff at its head office and at its store at Merry Hill Shopping Centre (“Merry Hill”). However, it was not proposing to dismiss as redundant 20 or more employees at any other establishment; namely at retail stores. As a consequence, a large number of claims pursued by employees assigned to retail stores other than Merry Hill were struck out.[6]At the telephone case management hearing before me, on 28 September 2016, it was agreed that in the light of the first respondent’s withdrawal of its legal representation as well as the suspension of an active defence of the claims1 it 1 It’s response and grounds of resistance remain in the pleadings however. was wholly proportionate for the tribunal to deal with the outstanding claims on the papers. I made further directions for case management prior to my determination, which were executed by the parties or their representatives. Material findings of fact[7]The P4U business model was largely built on negotiating ongoing contracts with networks such as O2, Vodafone and EE. Underlying P4U’s downfall was the decision of all three networks to terminate their contractual relationships with the company.[8]P4U lost its O2 contract in February 2014.[9]On 6 August 2014 Vodafone gave notice to P4U of their intention not to renew their network relationship which was lost by reason of an exclusive contract given by Vodafone to Carphone Warehouse. The loss of Vodafone some 6 months only after the loss of O2 was a serious problem for P4U. It is probable that by that point senior management was considering redundancies, since P4U had become entirely dependent on the contract with EE. But it was inevitable that EE would follow suit.[10]On 12 September 2014, EE intimated that it would not be renewing its contract with P4U on 12 September 2014.Even without that however it is probable that P4U would not have survived with EE alone.[11]In the wake of the departure of EE from 12 September 2014, P4U made no attempts to consult with its employees about ways of avoiding redundancies, reducing the number of redundancies or mitigating the consequences.[12]It is probable that some plan to dismiss employees as redundant had been formulated during the period 7 August 2014 to 1 September 2014. following the notice by Vodafone to terminate its contract and the failure of further negotiations.[13]There was no recognised trade union nor was there any pre-existing representative forum. To comply with the duty to consult under s.188 appropriate representatives must have been elected before the first of the dismissals took effect. There cannot have been a valid election of employee representatives after the first of the dismissals took effect.[14]Kenny Campbell, whose statement I have read states that on 25 September 2014 he received a call from HR requesting that his team nominate a representative. Asked if it was part of a legal consultation process he was told it was not but purely for the purposes of the administrators having one representative to deal with.[15]Such representatives who were appointed in this manner were not the product of a proper election process and cannot be deemed appropriate representatives consistently with s.188.[16]There is no evidence of ‘special circumstances’ that are relied upon by P4U.[17]In relation to at least two of the claimants, James Hope (1306803/2014) and Emily Curtis (4118651/2014), there were resignations from their employment. Having regard to s.19(1) TULRCA I must determine whether such claimants resigned unreasonably. I am satisfied that there were good reasons for their resignations following the announcement that P4U had entered into administration. Those claimants left to take up stable employment; and indeed efforts to find other employment was encouraged by P4U.
Relevant Law
[18]The main relevant provisions of TULRCA (as amended, most recently with effect on 6 April 2013) are as follows: - s. 188 (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 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. s. 188 (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 45 days, and(b) otherwise, at least 30 days, before the first of the dismissals takes effect. s. 188 (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, representatives of that 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 purpose of this section, in an election satisfying the requirements of section 188A (1). s. 188 (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. [The following provisions deal with what consultation entails] s. 188 (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. s. 188A 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 to (h) make detailed provision for the elections, including secret voting and accurate counting of votes].”[19]As to who may bring a complaint pursuant to s. 188 or 188A to an Employment Tribunal, s.189(1) TULRCA states: - “(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.”[20]I have considered Independent Insurance Co Limited v Aspinall [2011] IRLR 716 and the earlier decision of the Court of Appeal in Northgate v Mercy [2008] IRLR 222. I am satisfied that neither a recognised union nor employee representatives were in place and that this complaint thus falls within s.189(1)(a) (or failing that (d)).[21]Thus the employees have standing to make claims and indeed as Aspinall makes clear, individually they must do so within the statutory time limit in order to bring a claim. That time limit is set out within s.189 (5): - “An employment 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. Application of Law to the Facts[22]I have considered the files relating to the claims lodged. I have also considered the correspondence from the various parties. I have considered the bundles of documents produced on behalf of the claimants, which bundles extend to some 600 pages.[23]There were written witness statements of individual claimants who are part of the groups of claimants represented by Mr Kindell, of Morrish Solicitors and by Mr Doughty.[24]In relation to the 15 cases listed by Mr Doughty, which are said to have been dismissed in error, the records and files of the tribunal confirm that only the duplicate claims were withdrawn. Accordingly, all the individual claimants shown in the schedule at Part 2 of the Annex are part of the active claimants’ schedule and are therefore entitled to an award by virtue of this judgment. Part 3 of the Annex lists the individual dates of redundancy. A full digital copy of the list accompanies the Judgment.[25]The ET3 and Grounds of Resistance of the second respondent (SoS) were presented to the tribunal on 21 March 2016. The SoS could not comment on the extent to which when proposing to make 20 or more employees redundant, the first respondent (P4U) failed to consult representatives of the affected employees. The SoS submitted that if after consideration of the facts, the tribunal was of the opinion that the claims involved employees at multiple establishments, those claimants who worked at establishments where the proposal to dismiss as redundant affected fewer than 20 employees, were not entitled to any protective award. The SoS position was that there were only two sites with 20 or more employees; the head office with approximately 1069 employees and the Merry Hill store with 21 employees. The SoS submitted that claims from the employees of the remaining stores, all of which had less than 20 employees, should be dismissed.[26]There is no argument before me that the claimants were not dismissed or that their roles were redundant within TULRCA s. 195 (1) and I note the effect of s. 195 (2), that where an employee is or is proposed to be dismissed, it shall be presumed, unless the contrary is proved, that he is or is proposed to be dismissed as redundant.[27]I accept the written evidence of the witnesses that there was no attempt to consult with them or to elect representatives to enable such consultation to take place. No suggestion has been made that there were special circumstances that rendered such consultation not reasonably practicable, or which mitigate against the failure to do so. I note pursuant to s.189(6) that the burden lies on the employer to show there were special circumstances and that he did take such steps as were reasonably practicable.[28]I am satisfied that the respondent failed to comply with its obligation to consult in section 188 and in order to allow such consultation to take place failed to elect representatives in accordance with section 188A.[29]Accordingly, I find the complaint well founded. By virtue of s. 189(2) in such circumstances I may make a protective award. If I do the statute provides as follows: - “(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 the requirement of section 188; but shall not exceed 90 days.”[30]Accordingly, the protected period here commences on 19 September 2014. As to the length of the protected period, Peter Gibson LJ in the Court of Appeal in Susie Radin Limited v GMB and Others [2004] IRLR 400 [45] gave the following guidance: - “I suggest that ETs, in deciding in the exercise of their discretion whether to make a protective award and for what period, should have the following matters in mind:(1) The purpose of the award is to provide a sanction for breach by the employer of the obligations in s.188: it is not to compensate the employees for loss which they have suffered in consequence of the breach.(2) The ET have a wide discretion to do what is just and equitable in all the circumstances, but the focus should be on the seriousness of the employer's default.(3) The default may vary in seriousness from the technical to a complete failure to provide any of the required information and to consult.(4) The deliberateness of the failure may be relevant, as may the availability to the employer of legal advice about his obligations under s.188.(5) How the ET assesses the length of the protected period is a matter for the ET, but a proper approach in a case where there has been no consultation is to start with the maximum period and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the ET consider appropriate.”
Conclusion
[31]In my judgment there was no consultation or attempt to comply with the provisions in this case; no mitigating factors are advanced. The starting point for the assessment of the protective award is the maximum, 90 days, and whilst I have a wide discretion to do what is just and equitable, in the absence of any evidence that points to the employer attempting to comply with its obligations or any mitigating circumstances, I conclude there are no grounds for me to reduce the same and the protective award shall therefore be the maximum of 90 days.