Timmins & Ors v Shaw Carpets Ltd [1996] UKEAT 1351_95_1405

EAT
Timmins & Ors v Shaw Carpets Ltd
[1996] UKEAT 1351_95_1405 · 1996-05-14

JUDGE CLARK:

We are here concerned with 45 complaints of unfair dismissal arising out of a swingeing redundancy exercise carried out by the Respondent employer in 1994. All 45 applicants were members of the Transport and General Workers Union ("the Union") which, among other Trade Unions, was recognised by the Respondent for collective bargaining purposes.It was common ground that the reason for dismissal in each case was redundancy, but the applicants contended that their dismissals were automatically unfair in circumstances where the provisions of Section 59(1)(b) of the Employment Protection (Consolidation) Act 1978 (then in force) were breached; alternatively, that the dismissals were unfair under Section 57(3) of the Act.Those two issues were dealt with at separate hearings by the Sheffield Industrial Tribunal. Following the first hearing, held on 2 - 5 October 1995, the Industrial Tribunal found that although the Respondent was in breach of an agreed redundancy selection procedure, it had succeeded in justifying a departure from that procedure, and that the dismissal was not automatically unfair. Extended reasons for that decision are dated 21 November 1995 ("The First Reasons"). That same Tribunal then went on to consider Section 57(3) of the Act at a hearing held on 9 - 13 October 1995, and found the dismissals to be fair. Extended reasons for that decision are similarly dated 21 November 1995 ("The Second Reasons").Against both decisions the complainants now appeal. We shall consider each appeal in turn.

FIRST APPEAL (EAT 1351/95)

In paragraph 3 of the First Reasons the Industrial Tribunal set out the words of Section 59(1)(b) of the Act:
"(1) Where the reason or principal reason for the dismissal of an employee was that he was redundant, but it is shown that the circumstances constituting the redundancy applied equally to one or more other employees in the same undertaking who held positions similar to that held by him [the employee] and who have not been dismissed by the employer, and (b) that he [the employee] was selected for dismissal in contravention of a customary arrangement or agreed procedure relating to redundancy and there were no special reasons justifying a departure from that arrangement or procedure in his case [in the case of the employee],

then, for the purposes of this Part, the dismissal shall be regarded as unfair."

The words underlined by us were deleted by amendment to the Act, and the words following in brackets substituted therefor. However, in our view nothing turns on the inclusion of the deleted words in paragraph 3 of the First Reasons.This statutory provision was repealed with effect from 3 January 1995. However, since the effective date of termination in each of these cases was 9 December 1994 these Appellants were entitled to rely on Section 59(1)(b).It was common ground that a redundancy selection procedure was agreed between the Union and the Respondent. It was reduced into writing and dated 1 July 1994.It read, so far as is material;"Selection for compulsory redundancy shall be on a last in, first out principle based on service within the representational group." (LIFO).In fact, the Respondent did not apply the LIFO principle in this redundancy exercise. Instead, in a Form HR1 dated 12 September 1994 and issued by Mr Baker, the Finance Director who oversaw this exercise on behalf of management, the company proposed to select for redundancy "by examining criteria including skills, attendance records, overall performance and service and flexibility." It was common ground that such selection criteria breached the agreed procedure.The Respondent's grounds for departing from LIFO, are summarised in paragraph 12 of the First Reasons as follows:
"12. The respondents say that LIFO in the past has led to a workforce which is severely out of balance. They point to the fact that at the time of these redundancies the average age of their workforce was 48 years and that the average service was of the order of 20 years. They point out that in the past by the application of LIFO there had been no consideration for the accumulation of skills and they point to the obvious fact that all younger, perhaps enthusiastic recruits had long since been made redundant. The result was that they had a workforce which was unusually old and perhaps unreasonably secure and lacking in motivation and flexibility. The respondents say that they were obliged to correct that situation and that they could not develop new plans and procedures without selecting the best people for each job. They say that they needed the very best skills that were available to them if the slimmed down company were to have any chance of surviving. They also say that with the pre-existing agreement, namely LIFO which was related to union areas any redundancies would inevitably lead to redeployment and retraining of those remaining which would cost both time and money. Finally the respondents say that they were in a desperate situation the choice put before them was either to adopt more flexible and efficient working practices or to close the business altogether when everybody's job would be lost. They say that their managers were in danger of being overwhelmed in any case by the enormous changes which confronted them and that they needed to have the utmost confidence in their new workforce."
Having considered the case advanced by the Respondent, and some of the authorities on the topic, the Industrial Tribunal concluded, in paragraph 16 of their reasons, that the Respondent succeeded in showing that there was justification for their departure from the LIFO agreement. The Appellants' claims under Section 59(1)(b) failed.In support of the appeal against that decision Mr Bowers advances the following arguments.First, he submits that in order to answer the question posed by the exception contained in Section 59(1)(b) the Industrial Tribunal must ask itself three questions, the onus being on the employer to satisfy the Tribunal at each stage:(1) Were there special reasons?(2) Did those special reasons justify a departure from the agreed procedure?(3) Did it justify departure in the case of the particular employee?We accept that analysis. The question is whether this Industrial Tribunal correctly adopted that approach.Mr Bowers contends that on the face of the record the Industrial Tribunal has fallen into error by answering only the second question and not the first and third.He points to paragraphs 11, 12, 13 and 16 of the First Reasons, where the Tribunal refer only to "justification" and not special reasons for justifying a departure from the agreed procedure. We do not believe that is a fair reading of the decision. In our view the Tribunal had well in mind the requirement to find special reasons, having set out the statutory words in paragraph 3. We are satisfied that they did not misdirect themselves in using a short-hand version of the statutory test later in their reasons. Secondly, we cannot accept that the Tribunal failed to consider each applicant individually. There was no suggestion by the applicants before the Industrial Tribunal that any distinction was to be drawn between individual cases. Had that been so, it would have been incumbent on the Industrial Tribunal to consider those separate arguments. In our judgment Section 59(1)(b) provides an individual right, hence the reference to "the employee" and "in the case of the employee". That does not prevent a Tribunal considering the same argument in relation to a number of applicants whose cases are indistinguishable.Mr Bowers further submitted that the Tribunal misdirected itself by quoting extensively from the dissenting judgment of Watkins LJ in Cross International v Reid [1985] IRLR 387. Again, we reject that submission. The Tribunal observe that it is interesting to read his lordship's judgment, but note that he was in the minority. We are not persuaded that in doing so the Tribunal misdirected itself.Finally, he invites us to characterise the Industrial Tribunal's decision as perverse, particularly where, only 10 weeks earlier, the employer had agreed the procedure with the Union. We decline to do so. The unsigned agreement dated 1 July 1994 represented a statement of the existing arrangements. It was not a freshly negotiated agreement. The timing of the document is immaterial; either the Respondent showed special reasons justifying a departure or it did not. The Industrial Tribunal found that it had done so, based on what we regard as adequate reasoning in their decision. The finding was not perverse.Before leaving this appeal, we record two propositions advanced by Mr Bowers, unsupported by authority. First, that where parties have legislated by agreement for a particular result (her, LIFO) an Industrial Tribunal must identify something which is unforeseeable at the time the agreement is made, or at least unforeseen. Secondly, that the degree of special reasons to be identified must be balanced against the extent of the departure from the agreed procedure. It will take more to justify a complete abrogation of the agreed procedure.We can see no reason to place either gloss on the words of the statute. We think that the proper approach for an appellate court is to remind ourselves of the majority view in Cross International v Reid and others , to be found in the judgment of Stephen Brown LJ at paragraph 11 of the report:
"11. ... I have nevertheless come to the conclusion that the Employment Appeal Tribunal is correct when it states that the question which the Industrial Tribunal had to answer was one which was essentially appropriate for decision by `an industrial jury of three people two of whom at least would have personal knowledge of the problems brought by the conflicting pressures of redundancy upon the boardroom and the shop floor'."
We think that that approach is to be found in practice in the decision of this Appeal Tribunal in Rolls Royce Motor Cars Ltd v Price [1993] IRLR 203.On the evidence before this Industrial Tribunal we are satisfied that it could properly come to the conclusion that this employer had shown special reasons justifying a departure from the agreed procedure. Accordingly, this appeal must be dismissed.

SECOND APPEAL (EAT/1352/95)

Mr Bowers' first point in relation to the Industrial Tribunal's second decision, under Section 57(3) of the Act, is a repetition of his submission that the Tribunal failed to consider each applicant's case individually. For the reasons given earlier in connection with the first appeal we reject that submission, particularly having regard to the skeleton argument submitted on their behalf to the Tribunal by their solicitor, Mr Thornley, which draws no distinction between individual cases.The main thrust of this appeal focuses on the issue of consultation. It is contended that no reasonable tribunal could have concluded that these dismissals were fair having regard to the degree of consultation entered into between the employer and first the Union and secondly the individuals who were eventually made redundant.In order to consider that proposition it is necessary to follow, as Mr Swift invited us to do, the progress of the consultation process.On 16 September 1994 the first meeting between management and the Union took place. The proposed selection criteria were disclosed to the Union. Those proposals were considered in detail at the meeting.On 20 September a further meeting took place with the Union and that was followed by another meeting on 27 September. Thereafter, consultation with individual employees took place for which purpose the Personnel Manager, Mrs Beresford, provided guidance notes for line managers in these terms:
"Consultation with individual employees will begin with an interview between each member of your department and yourselves. The object is to gather information about individuals to assist in deciding their suitability for the new business and also to give information about the new terms and conditions. Consistency between managers is important. Please use the employee assessment form as a guide to the matters to be discussed at the interview and to record the information."
The Tribunal found as a fact that those interviews, which were completed by 12 October were conducted substantially in accordance with those instructions.On 18 October there was a further meeting between the employer and the Trade Union. On 2 November the Respondent gave notice to the workforce that they were only prepared to proceed on the basis of having freedom to select individuals for retention, and at the same time they made an improved offer of enhanced terms for those who wished to take voluntary redundancy. A meeting with the Trade Union took place on the same day.On 23 November a further meeting took place between Mr Baker and the Trade Union representatives. On the same day Mr Martin, the Respondent's Managing Director wrote to all employees informing them that it was the intention of management to select for continued employment in the business on the basis of skills, flexibility, experience and attendance in addition to service.Finally, on 5 December, meetings were held with all those employees identified for redundancy.Those meetings were followed by appeals held by Mr Baker at which, the Tribunal found, he considered each appellant's record and the relevant assessment forms. The Tribunal were satisfied that Mr Baker gave detailed and separate attention to each appellant and that he examined the assessment forms to see if any error had been made. They accepted that he could find no such error and that as a result all the appeals were dismissed.Against that background the Industrial Tribunal rejected the contention that inadequate consultation had taken place, and found that a fair appeal procedure had been followed by Mr Baker.

THE LAW

The need for proper consultation to take place between the employer and both the recognised Trade Union and, where necessary, the individual employees, has recently been underscored by the judgment of the Court of Session in King v Eaton Ltd [1996] IRLR 199, expressly approving the decision of the Employment Appeal Tribunal in Rowell v Hubbard Group Services Ltd [1995] IRLR 195. See per Lord Ross at paragraphs 20-22. We also bear in mind the words of Knox J in delivering the judgment of the Employment Appeal Tribunal in Rolls Royce Ltd v Price (ibid) at paragraphs 30-31.We are satisfied that it was open to the Industrial Tribunal to conclude that adequate consultation had taken place between management and the Union. We have considered carefully the Tribunal's findings as to individual consultation. Plainly the final interviews with individuals selected for redundancy came at a time when the final list had been drawn up. However, the earlier individual meetings which took place in late September/early October 1994 provided each employee with an opportunity to make representations as to his or her strengths in relation to each of the criteria used by the Respondent and we bear in mind the Industrial Tribunal's findings as to the propriety of the appeal process conducted by Mr Baker. Having considered all these matters in the round we have concluded that this Industrial Tribunal reached a permissible finding on this aspect of the Section 57(3) enquiry.Mr Bowers further contends that the Industrial Tribunal decision was flawed in that the Tribunal did not consider whether the Respondent concerned itself with the reasons for non-attendance at work, although attendance was one of the selection criteria. He relies upon Paine & Moore v Grundy [1981] IRLR 267.No reference is made to this in the Industrial Tribunal decision, probably because it was not raised on behalf of the Appellants in argument. However, we think that the short answer is that at the first round of individual interviews, when the employees had been made aware of the criteria, it was open to each individual to make such representations as he thought fit as to his or her attendance record. In the absence of any exploration of that matter before the Industrial Tribunal we are not prepared to set aside the decision on this basis, particularly in circumstances where the onus of proving reasonableness under Section 57(3), present in Grundy , no longer applies.In these circumstances we conclude that there are no grounds for interfering with this Industrial Tribunal 's second decision and this appeal must also be dismissed.