IRON AND STEEL TRADES CONFEDERATION (ISTC) v (1) ASW HOLDINGS PLC (IN ADMINISTRATIVE RECEIVERSHIP) [2004] UKEAT 0694_04_0511

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2004] UKEAT 0694_04_0511Case No Appeal No. UKEAT/0694/04Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
IRON AND STEEL TRADES CONFEDERATION (ISTC)APPELLANT(1) ASW HOLDINGS PLC (IN ADMINISTRATIVE RECEIVERSHIP)RESPONDENT
Before
His Honour Judge Prophet Mr P A L ParkerDate 5 November 2004
[1]APPEARANCES For the Appellant MR JASON GALBRAITH-MARTEN (of Counsel) Instructed by: Messrs Whittles Solicitors Pearl Assurance House 23 Princess Street Albert Square Manchester M2 4ER For the Respondents MR SIMON DEVONSHIRE (of Counsel) Instructed by: Messrs Edwards Geldard Solicitors Dumfries House Dumfries Place Cardiff CF10 3ZF SUMMARY Procedure for handling redundancies – obligation to consult s.188 Trade Union and Labour Relations (Consolidation) Act 1992 – special circumstances – s.188(7) misdirection by Employment Tribunal – appeal allowed and case remitted for rehearing. HIS HONOUR JUDGE PROPHET On 3 and 4 June 2004 an Employment Tribunal sitting at Cardiff, under the chairmanship of Mr Bowen, with Mr Standing and Mr Ling as the lay members, held a hearing in respect of an application by the Iron and Steel Trades Confederation (ISTC) for a declaration that the Respondents had failed to comply with the requirements of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 and for a consequent protective award under section 189, for all employees of the Second Respondent, ASW Ltd, now the only Respondent, who were made redundant. ASW Ltd is now in Administrative Receivership and Liquidation following a period of trading and financial difficulties. ISTC is a recognised trade union for the purposes of section 188.[2]It is common ground that on 24 July 2002 a decision that several hundred employees of ASW Ltd were to be dismissed for redundancy triggered the consideration of the relevant sections of the Trade Union and Labour Relations (Consolidation) Act 1992 under the heading "Procedure for Handling Redundancies". In particular, section 188(1) provides:
"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."
Further subsections deal with the timing and the method of consultation. Section 188(7) says:
"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."
[3]The Employment Tribunal found that there were special circumstances within section 188(7) and that consequently ASW Ltd was relieved of its consultation obligations under section 188, other than the taking of such steps as were reasonable in the circumstances.[4]The appeal to this Tribunal centres on a challenge to the Employment Tribunal's finding that there were special circumstances. Mr Galbraith-Marten of Counsel represents the Appellant and Mr Devonshire of Counsel represents the Respondents, and we are grateful to both of them for the clarity of their submissions to us today.[5]The general principle behind section 188 and the subsequent sections is clearly to support what makes good sense in employment relations, that is to say, to remind employers, if they do need reminding, that employees and trade unions should, as quickly as possible, be brought into consultation if there are financial and trading difficulties which could seriously affect the livelihood of the workers in their establishment.[6]The authorities to which we have been directed today make it clear that insolvency, in itself, does not constitute special circumstances: see Clarks of Hove v The Bakers' Union [1978] IRLR 366 (CA). That case is also helpful in that there is recognition that it being impracticable or futile to consult is not a reason for avoiding consultation. That case indicates that the meaning of "special circumstances" has to be something out of the ordinary as compared, say, with an insolvency situation which can arise, as it were, as an occupational hazard for any company However, as Mr Devonshire has pointed out to us, a sudden can arise, even where there are financial difficulties or insolvency, such as to constitute special circumstances: see for example Hamish Armour v ASTMS [1979] IRLR 24 and USDAW v Leancut Bacon Ltd (in liquidation) [1981] IRLR 295.[7]We can conveniently begin with the first ground of appeal which arises from what is said in paragraph 59 of the Employment Tribunal's Extended Reasons:
"The Applicant has not demonstrated that the requirements of Section 188, which would otherwise lead to a declaration and possibly a protective award, have been met."
Mr Galbraith-Marten says that that is an indication that the Employment Tribunal misunderstood the burden of proof in respect of special circumstances in that section 189(6) of the 1992 Act states:
"(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, … it is for the employer to show that there were …."
[8]Mr Devonshire submits that even if the burden of proof is misdirected, the Employment Tribunal was essentially required to decide whether they could accept the proposition put forward by the employers that the special circumstances existed and that is what they did. We are not able to accept that. It seems to us that there was a serious misdirection by the Employment Tribunal in respect of the burden of proof. That constitutes an error of law such that their approach was unsatisfactory and thus their consequent Decision has to be regarded as unsafe.[9]On that ground, therefore, we would allow this appeal.[10]The second ground of appeal is, in our view, even more compelling. What lies behind Mr Galbraith-Marten's submission is that the Employment Tribunal was treading a dangerous path to be utilising the argument of futility as amounting to a special circumstance. This involves our quoting from paragraph 57 of the Employment Tribunal's Extended Reasons as follows:
"We conclude that to engage in ninety days-long consultation with the unions would have been fruitless and pointless and we find as a fact that this, therefore, must amount to special circumstances which relieved the Joint Administrative Receivers of their obligation under Section 188."
[11]Mr Devonshire has made valiant efforts before us today to analyse the Employment Tribunal's Decision and Reasons and to argue that the Employment Tribunal was in fact finding the sudden circumstances which caused the appointment of Receivers, as constituting special circumstances. Again we are not able to accept that submission. In our view the wording in paragraph 57 is clear. Indeed, as Mr Galbraith-Marten has said in his submission, wording in paragraph 58 does, to some extent, support the view that the Employment Tribunal was making it apparent that special circumstances arose from the fact that it would have been fruitless and pointless to pursue a consultation exercise in accordance with section 188.[12]The recent Court of Appeal judgment in Susie Radin Ltd v GMB [2004] IRLR 400 was not, of course, available to the Employment Tribunal at the time when they made their Decision in this case. That judgment does, however, make it clear, in support of earlier authorities e.g. Middlesborough BCv TGWU [2002] IRLR 332 , that the futility of consultation is not relevant to the procedures leading to the making of a protective award, by constituting a special circumstance.[13]It follows that that Employment Tribunal misdirected itself on that matter and we would, therefore, allow this appeal also on that basis.[14]Mr Galbraith-Marten has urged us to ourselves substitute a Decision that there has been a breach of section 188. We agree however with Mr Devonshire that it would not be appropriate for us to do so. The question here is that the misdirections need to be corrected, but then it still remains for an Employment Tribunal, hearing the evidence, to determine whether in the particular circumstances of this case special circumstances could be found to exist.[15]In that situation we direct the matter to be reheard by an Employment Tribunal. A further issue then arises as to whether that should be the same Employment Tribunal or a differently constituted tribunal, Mr Devonshire has quite rightly reminded us of a recent Decision of the President of this Tribunal which requires us to consider whether remission to the same Tribunal should be an appropriate course if at all possible. However, in the particular circumstances of this case, our judgment is that it should be remitted to a differently constituted tribunal for rehearing, and we so Order.[16]It would no doubt be helpful to the newly constituted employment tribunal if Counsel could set out an agreed statement of facts, and we would be obliged if Counsel would kindly consider that.