GMB v SWORDWARD CLOTHING LTD (IN LIQUIDATION) [2003] UKEAT 0583_02_0703

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2003] UKEAT 0583_02_0703Case No Appeal No. EAT/0583/02Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
GMBAPPELLANTSWORDWARD CLOTHING LTD (IN LIQUIDATION)RESPONDENT
Before
Mr Justice KeithLord Davies of CoityDate 7 March 2003
[1]APPEARANCES For the Appellant MISS CLAIRE McCANN (of Counsel) Instructed By: Messrs Thompsons Solicitors Martins Building Water Street Liverpool L2 3SX MR JUSTICE KEITH : The Applicant, GMB ("the Union") is an independent trade union. It was recognised by the Respondent, Swordward Clothing Ltd ("the Company"), in respect of some of the Company's employees ("the affected employees"). It presented a complaint to an Employment Tribunal under section 189(1)(c) of the Trade Union and Labour Relations (Consolidation) Act 1992 ("the Act") that the Company had failed to consult it about the dismissal of the affected employees as required by section 188(1) of the Act.[2]A Chairman of an Employment Tribunal held at Liverpool heard the complaint sitting alone, as he was entitled to under section 4(3)(g) of the Employment Tribunals Act 1996 , because the Company did not contest the case. That was apparent from the fact that it did not file a Notice of Appearance, and no-one attended the hearing at the Employment Tribunal on its behalf. The Tribunal upheld the complaint and made a protective award under section 189(2) of the Act, ordering the Company to pay remuneration for a protected period of 7 days. The Union now appeals against that order, arguing that the protected period should have been much longer. The Company is now in liquidation, and the liquidator has informed the Employment Appeal Tribunal that he does not intend to oppose the appeal. Nevertheless, the Employment Appeal Tribunal has still to decide the appeal on its merits.[3]The facts were not in dispute in the Tribunal. The Company manufactured children's clothing. It described itself as a member of the Swordward Group of Companies, and it was a wholly-owned subsidiary of Swordward Ltd. On Friday 27 July 2001, the Company closed down for its annual summer holiday for two weeks. Its workforce were due to return to work on Monday 13 August. On that date the whole of the Company's workforce was told that the Company had become insolvent, and they were each handed a letter which informed them of their dismissal by reason of redundancy with immediate effect. 26 members of the workforce were members of the Union, and the Union's representative had not been consulted over the proposed redundancies or even informed of what was to happen. On 4 September 2001 the Company went into administrative receivership.[4]On these facts, the Tribunal had little difficulty in concluding that the Company had failed to consult with the Union about the proposed dismissals of the affected employees as required by section 188(1) of the Act, or that a protective award should be made under section 189(2) of the Act, ie an award ordering the Company to pay remuneration for the protected period in respect of the affected employees. But how long should that protected period have been? The relevant provision is section 189(4) of the Act, which provides:
"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."
Unfortunately, the Tribunal gave no reasons for its decision that the protected period should be 7 days. All it said was:
"The Tribunal considered next the length of the protected period under section 189(4)(b) of the Act and decided in the circumstances that it is just and equitable to make the award for the period of 7 days, beginning on 13 August 2001."
Although it used some of the language of section 189(4)(b), ie the need for the award to be just and equitable, the Tribunal did not refer to the rest of the language of section 189(4)(b), ie the need for the award to reflect the seriousness of the employer's default in failing to comply with its statutory obligations. In the present case the default was just about as serious as it could be. No consultation had taken place at all, and the Company did not proffer an explanation why, when it must have realised the financial difficulty it was facing it did not even inform the Union of what was going to happen.[5]Moreover, the Tribunal did not refer to the fact that the consultation, which the Company was obliged to conduct with the Union, should have begun at least 30 days before 13 August. That is the effect of section 188(1A) of the Act, which provides:
"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 take effect."
The relevance of that is as follows. In Spillers-French (Holdings) Ltd v Union of Shop, Distributive & Allied Workers [1980] ICR 31 ( a union of which one member of this constitution of the Employment Appeal Tribunal is not wholly unfamiliar) the Employment Appeal Tribunal agreed with its earlier decision in Talke Fashions Ltd v Amalgamated Society of Textile Workers and Kindred Trades [1977] ICR 833 that the predecessor of section 189(4) was to be interpreted as compensatory, not penal. The paramount consideration was to compensate the employees, not to punish the employer. Although section 189(4)(b) requires the Tribunal to take into account the seriousness of the employer's default, that has to be considered in the context of its effect on the employees, rather than to mark the union's displeasure over serious violations of the duty to consult with it. But in Spillers-French the point was made that what the employees had to be compensated for is the loss of their right to be consulted through their union. The Tribunal should therefore compare the period of consultation which the employees were entitled to with the period of consultation which in fact took place, if any. Thus, the Tribunal's starting point should be the difference between those two periods, and the length of the resultant period should then be adjusted, up or down, to meet the justice of the case, including the seriousness of the default, subject to the statutory maximum of 90 days.[6]That could not have been the Tribunal's thinking because since there had been no consultation at all, the Tribunal's starting point should have been 30 days, and there was nothing advanced on the Company's behalf which suggested that the justice of the case required the length of the protected period to be significantly less than that. When one adds to that the Tribunal's failure to refer to the need to consider the seriousness of the Company's default, the inescapable conclusion is that somewhere along the line the Tribunal's thinking has gone awry. The absence of reasons makes it difficult to know where that was, though in defence of the Tribunal it may be that they were not referred to any of the relevant authorities, as we have been, or indeed the discussion in Harvey, Vol 2, Division E, paragraphs 2648 to 2662, in which the length of the protected period is discussed.[7]It is possible that what prompted the Tribunal to decide on such an unusually short protected period is that the Company was insolvent. But the Tribunal correctly concluded that insolvency did not amount to special circumstances for the purposes of section 188(7) of the Act, which provides, so far as is material:
"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, the employer shall take all such steps towards compliance with that requirement as are reasonably practicable in those circumstances."
If, therefore, the Company's insolvency did not amount to a special circumstance which rendered it not reasonably practicable for the Company to consult with the Union at least 30 days before 13 August, the Company's insolvency could hardly have justified a protected period of less than 30 days.[8]We agree with Miss Claire McCann for the Union that it would be a waste of time and expense to remit the case to the Tribunal for the reconsideration of the length of the protected period in the light of the correct principles. The facts are not in dispute, and we are in as good a position to make that assessment as the Tribunal. We acknowledge that the maximum protected period is 90 days, but it is only appropriate to order a protected period of that length if the number of employees who the employers were proposing to dismiss as redundant was large enough, ie 100 employees or more, as to require the consultation to begin at least 90 days before the first of those dismissals took effect. We have not been referred to, nor have we found, any case in which a protected period of the maximum length of 90 days has been thought to be appropriate where consultation had to begin, as here, at least 30 days before the first of the dismissals took effect.[9]In the present case, the seriousness of default meant that no consultation took place at all, and that is most appropriately reflected by the protected period being the equivalent of the minimum number of days during which the Company had been required to consult with the Union before 13 August, because that was the length of the period of consultation of which the affected employees had been deprived. For these reasons, therefore, this appeal must be allowed, the order of the Employment Tribunal that the Company pay remuneration to the affected employees for a protected period of 7 days beginning from 13 August 2001 is set aside, and we substitute for that order an order that the Company pay remuneration to the affected employees for a protected period of 30 days beginning from 13 August 2001.