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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Harford & Ors v. Secretary of State for Trade and Industry [2008] UKEAT 0313_07_1202 (12 February 2008) URL: http://www.bailii.org/uk/cases/UKEAT/2008/0313_07_1202.html Cite as: [2008] UKEAT 0313_07_1202, [2008] UKEAT 313_7_1202

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APPEARANCES

 

For the Appellants	MR N CARR (of Counsel) Instructed by: Messrs Raleys Solicitors Regent House Regent Street Barnsley South Yorkshire S70 2EG
For the Respondent	MR M BARNES (of Counsel) Instructed by: The Treasury Solicitor (Employment Law Team One Kemble Street London WC2B 4TS


 


SUMMARY

Redundancy: Protective award

Practice and Procedure: Parties

Dismissals without consultation when company placed in receivership - protective award made in favour of GMB trade union representing manual workers in respect of those employees "dismissed on 3 May or 5 May 2006" - held, that this award could not benefit manual workers, not members of the union, dismissed on other dates in May 2006, and that as matters stood such workers had no remedy against the Secretary of State; but that such workers could apply to the employment tribunal to be joined out of time as parties to the GMB case, for the decision in the GMB case to be reviewed so as to cover dismissals on other dates, and for any consequent protective award to be recoverable as a debt from the Secretary of State.


 


THE HONOURABLE MR JUSTICE BEAN

1. On 2 May 2006 William Freeman Limited was placed in administrative receivership. In the usual way its employees were dismissed as redundant beginning with a large batch on 3 May and continuing in smaller numbers until 26 May. On 19 June 2006 the GMB trade union lodged a claim for a protective award in the Employment Tribunal. That case came on for hearing before Mr G R Little, Chairman, sitting alone, at the Sheffield tribunal, on 11 October 2006. The Chairman made a protective award for a 90-day protected period in respect of all employees of William Freeman Ltd who were dismissed by reason of redundancy (having formerly worked at the Respondent's establishment at Wakefield Road, Barnsley) on 3 May 2006. He had declared that the complaint was well-founded, but otherwise gave no reasons for his decision either as to the period of 90 days or as to the description of the employees to which the award should apply. The Claimant union was represented by one of its organisers, a Mr Innes. It appears that no witnesses were called. The Respondent being the company in receivership was unsurprisingly unrepresented and did not appear.
2. On 30 November the same Chairman considered a request made by letter of 14 November from Mr Innes to review the judgment given on 11 October so that as well as referring to employees dismissed on 3 May 2006 it would also refer to those dismissed on 5 May. In the brief reasons in support the Chairman recorded that the letter had sought a review on the interests of justice ground, and that two of the Claimant union's members had been dismissed on 5 May rather than 3 May. Mr Innes had believed at the time of the first hearing that all his members had been dismissed on 3 May and only subsequently discovered that two had not been dismissed until 5 May.
3. On 4 December 2006 a request was made to the Department of Trade & Industry, as it then was, by the present Claimants for payment of a protective award under s182 of the Employment Rights Act 1996. The present Claimants were former employees of William Freeman Limited who had been dismissed on varying dates, beginning with Mr Harrison, who was dismissed on 5 May 2006, continuing with a colleague who was dismissed on 6 May, and ending, after various dates in between, with six Claimants who were dismissed on 26 May. None of this is in dispute. There is a dispute, to which I shall return later, as to whether the Claimants or all of them were manual workers, the significance of that point being that it was only in respect of manual workers that the GMB had been recognised by the company.
4. The Department, by letters of 19 December 2006, refused the claim. The letter I have was addressed to Mr Richard Harford, one of the Claimants, who may be taken as representative of all of them. It included the following:

"In the case of William Freeman Ltd, on an application made by the GMB, an Employment Tribunal on 3 October 2006, made a protective award in respect of employees who were made redundant on 3 May 2006. The effect of this was that anyone dismissed after that date was not covered by the award. It seems that subsequently the GMB became aware that two of its members were not dismissed until 5 May 2006 and the union made a further application to an Employment Tribunal, which amended the original ruling to cover employees dismissed on both 3 May 2006 and 5 May 2006. This again means that any employees dismissed after 5 May 2006 are not covered by either judgment.

In order to be able to claim a protective award from the RPD [the Redundancy Payments Directorate] it will be necessary for you to obtain a further Tribunal ruling covering the date of your dismissal. This will apply equally to any other employees who are in a similar position. As the GMB's second application was only in respect of two of its members I am assuming you are not a GMB member. However, that does not prevent you making an application yourself. If you wish to do so, which I would advise you to do, the form you need is an ET1."

5. Mr Harford and his colleagues appealed to the Employment Tribunal under s188 of the Employment Rights Act 1996 against the failure of the Secretary of State to make a s182 payment. For such a payment to be made the applicant must show that his employer has become insolvent, that his employment has been terminated, and that on the appropriate date, that is the later of the two events - the insolvency and the dismissal - he was entitled to be paid a "debt" within the meaning of s182. By s184(2)(d) a protective award is classified as a s182 debt.
6. The relevant provisions of the Trade Union and Labour Relations (Consolidation) Act 1992 are as follows:

"188 Duty of employer to consult … representatives

(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 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.

(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 90 days , and

(b) otherwise, at least 30 days.

before the first of those dismissals takes effect.

[(1B) For the purposes of this section the apppriate representatives of any affected employees are -

(a) if the employees are of a description in respect of which an independent trade union is recognised by their employer, representatives of the 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 purposes of this section, in an election satisfying the requirements of section 188A(1).]

(8) This section does not confer any rights on a trade union, a representative or an employee except as provided by sections 189 to 192 below.

189 Complaint … and protective award

(1) Where an employer has failed to comply with a requirement of section 188, or section 188A, a complaint may be presented to an [employment] tribunal on that ground-

(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.

(2) If the tribunal finds the complaint well-founded it shall make a declaration to that effect and may also make a protective award.

(3) A protective award is an award in respect of one or more descriptions of employees—

(a) who have been dismissed as redundant, or whom it is proposed to dismiss as redundant, and

(b) in respect of whose dismissal or proposed dismissal the employer has failed to comply with a requirement of section 188,

ordering the employer to pay remuneration for the protected period.

(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 any requirement of section 188;

but shall not exceed 90 days …

190 Entitlement under protective award

(1) Where an [employment tribunal] has made a protective award, every employee of a description to which the award relates is entitled, subject to the following provisions and to section 191, to be paid remuneration by his employer for the protected period.

192 Complaint by employee to [employment tribunal]

(1) An employee may present a complaint to an [employment tribunal] on the ground that he is an employee of a description to which a protective award relates and that his employer has failed, wholly or in part, to pay him remuneration under the award.

…

(3) Where the tribunal finds a complaint under this section well founded it shall order the employer to pay the complainant the amount of remuneration which it finds is due to him.

(4) The remedy of an employee for infringement of his right to remuneration under a protective award is by way of complaint under this section, and not otherwise."

7. The claim to the Tribunal in the present case brought by each of the Claimants gave very little information in the printed parts of the standard form. In particular, the employment details under section 4 were not completed. These include question 4.2 which says: "Please say what job you do or did." However, in grounds of complaint, running to several pages and dated 6 February 2007 and sent in with or attached to the ET1 forms, the Claimants' solicitors included the following passage:

"3. The GMB trade union was recognised by William Freeman Limited as the representative of the manual workers employed at its Barnsley establishment and all the Claimants within this application fell within the category of manual workers."

The grounds of complaint then refer to the Tribunal's decision in the GMB case and the review decision adding the two GMB members dismissed on 5 May, and continue:

"None of the Claimants in this application were dismissed on either 3 May 2006 or 5 May 2006. None of them are members of the GMB trade union. Accordingly the GMB has no interest in pursuing claims on their behalf and had no reason to include them in its application for a review of the original Judgment. Under s189 of the aforesaid 1992 Act the cause of action to bring a complaint in respect of a failure to consult pursuant to s188 vested in a recognised trade union and none of the employees as individuals had the right to present claims to the Employment Tribunal in respect of that failure to consult…It does not appear to be open to the Claimants in this application to apply to the Employment Tribunal for a further review of the decision given on the GMB's application because rule 34 of schedule 1 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004 only permits an application for review to be made by a party to the relevant decision."

The grounds of complaint went on to ask the tribunal to determine whether the Claimants were entitled to claim under the protective award and if so to quantify the amount so payable. They ended by saying that it was not reasonably practicable to present the claims earlier.

8. On the hearing of the Claimants' appeal to the tribunal they were represented by Mr Neil Carr who has also appeared for them today. The Respondent, the Secretary of State, was not represented, and it appears that no evidence was called; the Secretary of State had, however, submitted a form ET3. In section 5, the substance of the response noted these employees were dismissed on other dates (that is other than 3 or 5 May 2006) that were not included in the judgment or the review decision in the GMB's case. The response accepted that the employer was insolvent and that if the Claimants were successful any award would lie against the National Insurance Fund. It went on:

"It is not the Secretary of State's practice to participate in the part of the hearing relating to the allegations about the employer's failure to observe the redundancy consultation legislation. The facts surrounding this are considered to be an issue between employer (or insolvency practitioner) and the appropriate employees' representatives to which the Secretary of State cannot useful contribute. However, liability for payments, within limits, is acknowledged."

9. The Chairman, having heard submissions from Mr Carr on 3 April reserved judgment, and his decision was promulgated a month later. In section 4 headed "the current proceedings" he says this:

"None of the Claimants attended the hearing nor did I have the benefit of any written statements. Salient matters which I can identify from the papers before me, which includes a bundle of documents prepared by the Claimants solicitors, are as follows:

4.1 None of the Claimants are or were members of the GMB.

4.2 I am assuming that none of the Claimants were manual workers (whom the GMB did represent). However, as none of the claim forms have been completed at Section 4 I have no information as to what job these 13 Claimants actually did. However I deduce from the HR1 document that I have from the GMB case that the current 13 are the managerial/technical staff therein referred to.

4.3 As matters stand, I can only assume that the current Claimants were not consulted and nor were any representatives who might or might not have been elected on their behalf for that purpose. I have to make that assumption because it does not appear to be addressed anywhere in the claims that are before me. As the claim is brought against a Respondent which was not the employer and so had no duty to consult that is hardly surprising.

4.4 From the document headed "Draft Schedule of Agreed Facts" it appears that Mr Harford and one colleague, Mr Betton, were dismissed on 6 May 2006; 6 more of the Claimants were dismissed on 26 May 2006, 1 on 5 May, 3 on 12 May and 1 on 19 May."

10. After reference to Mr Carr's submission and to the judgment of this Appeal Tribunal in the case of Transport and General Workers Union v Brauer Coley Ltd [2007] IRLR 207, the learned Chairman said this:

"7.3 The judgment in Brauer Coley goes on to make clear that if the Claimant is a trade union that claim [under s189] must be based upon a breach of the obligation owed to the trade union. It followed that a Tribunal could only make a protective award in respect of the section of employees for which the trade union was recognised by the employers. In the Brauer Coley case that was the shop floor engineering workers. Membership of the union was not essential, but membership of the particular part of the work force in respect of which the union was recognised, was essential.

8.1 Two stark facts emerge. First the only proceedings which have been brought seeking a protective award were those brought by the GMB. Secondly, the present Claimants, whatever the date of their dismissal, were not within the category of the work force in respect of which the GMB were recognised. The GMB were recognised in respect of manual workers at William Freeman's factory. They were not recognised in respect of managerial or technical staff.

8.2 In those circumstances I cannot accept that the protective awards I have made in the GMB case can benefit the present Claimants. In those circumstances I conclude that the appeal against the decision of the Secretary of State is not sustained, albeit for slightly different reasons than those stated by the Secretary of State. Moreover, I do not have jurisdiction to determine any claim for a protective award for these claimants (de novo) as no such claim is before me.

…

8.5 Is a Review possible?

Not wishing to make a mountain out of a mole hill, nor to see these Claimants kept out of an award on a technicality, I have considered whether it is appropriate for me to review of my own initiative my judgment in the GMB case. However I find that I cannot. In the absence of the relevant claim by the relevant Claimants it would be wrong for me to "re-write" the GMB judgments so as to give a remedy to the present Claimants when no such claim is before the Tribunal.

8.6 Although it is not my function to give advice to the parties, the Claimants may wish to give consideration to presenting their own individual claims pursuant to Section 189(1)(a) and/or (d) of the 1992 Act if so advised."

11. Dealing with the Chairman's paragraph 8.5 first: he was quite right to say that if, as he assumed, the Claimants were managerial and technical staff it was not open for him to rewrite the GMB judgment so as to give them a remedy. If the Claimants were indeed managerial or technical staff, only they as individuals could bring or could have brought a claim for a protective award. But if, as Mr Carr submits, some or all of his clients were manual workers the position becomes more difficult.
12. Mr Carr's simplest ground of appeal from the Chairman's decision relates to the assumption that none of the Claimants was a manual worker represented by the GMB. I regard the use of the word "assuming" in paragraph 4.2 as highly significant. It is true, as the Chairman said, that the claim forms were not completed at section 4 and did not state in the case of each individual Claimant what job he or she had done. It would have been better if they had, but it is quite common in my experience for a large group of Claimants before the Tribunal to give particulars of their grounds of complaint in a separate document. That separate document did allege, in paragraph 3, that all the Claimants in this application fell within the category of manual workers in respect of which the GMB was recognised. The Secretary of State's ET3, quite reasonably did not take factual issue with this point. The Secretary of State was not in a position to know. But I accept from Mr Carr that the Chairman did not raise the point with him at the hearing either. Instead, when examining the documents in the course of preparing his reserved judgment, he discovered that document HR1 informed the Department that William Freeman had had 13 managerial/technical staff on their books and deduced from this that the 13 Claimants must be the 13 managerial/technical staff. If that was something that he deduced from the document, then it was incumbent on him as a matter of due process to put that point to the Claimants' representative. If he had noticed the point at the hearing, he would no doubt have raised it with Mr Carr at the hearing. If he did not do so then Mr Carr, as I see it, was entitled to assume that the assertion in the grounds of complaint was simply not in issue. If it was something that the learned Chairman only noticed when preparing his reserved judgment then due process required that a letter should be sent to Mr Carr asking whether he had any submissions to make on the point.
13. I am not in a position to make a finding of fact as to whether all, or even some, of the Claimants were manual workers. Mr Matthew Barnes, in the course of his skilful submissions on behalf of the Secretary of State, has pointed out that the documents lodged with the Redundancy Payments Directorate by the company and by individual employees suggest that some were and some were not. One for example is described as a maintenance engineer; another is described as having a job in production planning. For the present purposes, it is sufficient to say that this issue requires re-examination.
14. If this issue stood alone the Claimants' cause of action would be rendered non-viable by Mr Barnes' second point, which may be called the date of dismissal point. It affects all the Claimants except Mr Harrison, who fortuitously was dismissed on 5 May. The point is that the form of order in the GMB case is, for good reason or ill, limited to employees who were dismissed on either 3 or 5 May, and no one else can take advantage of that award.
15. It is not clear to me why the Chairman worded his order in the GMB case in the way he did. Of course, as Mr Barnes rightly submits, in some cases a factual distinction may fall to be drawn between workers dismissed on one date and those dismissed on another, particularly if they are in separate and distinct groups. But it seems very unlikely on the limited facts available to me on this appeal that this was such a case. This appears to have been a fairly standard receivership, where the majority of employees are dismissed the day after the appointment of the administrative receivers, and a minority are kept on for periods varying from a couple of days to four weeks in order to wind up the company's business and assist the representatives of the receivers. Yet if the order in the GMB case stands uncorrected, manual workers dismissed on any other day than 3 or 5 May, even those dismissed on 6 May, would appear to be without any remedy.
16. The Claimants could not take part in the hearing of the GMB's case because they were not parties to it and had probably not been notified of it. They could not appeal against the order because they were not parties. They are now out of time for making a free-standing claim under s189(1)(a) or (d), subject to the power to extend time when it was not reasonably practicable to make a claim in good time. In any event it is arguable that where an individual falls within the description of employees in respect of which a trade union is recognised only the trade union can bring a claim. It is unnecessary and undesirable for me to decide that today.
17. I am confident that had the Claimants been present in any capacity, even as witnesses, at the original hearing of the case brought by the GMB, it is extremely unlikely that the Chairman would have limited the order in the way which he did. The course I suggest is that the Claimants make an application to the Employment Tribunal under rules 10(2)(r), 34 and 35 of the Employment Tribunal Rules (i) for the Chairman to allow them, even now, to be joined as parties to the GMB case, having an interest in its outcome, and (ii) for the decision in that case to be further reviewed out of time insofar as it limits the protective award to being in respect of employees dismissed on 3 May or as initially reviewed on 5 May 2006. That question should be determined before the remitted hearing of the claim against the Secretary of State, but the learned Chairman, if he thinks fit, may list that application, if he requires an oral hearing of it, to take place immediately before the remitted hearing. It is a matter for the Tribunal what orders to make on any such application by the Claimants and what procedure to adopt. The only thing which clearly should not happen is the listing of the remitted case against the Secretary of State before the Tribunal has had an opportunity to come to a decision on any application made by the Claimants under the rules to which I have referred, which should be made within 21 days of today. The Chairman may, indeed, wish to have a transcript of this judgment available to him before coming to any conclusion.
18. I have considered whether the case against the Secretary of State should be remitted to a different Tribunal. Applying the guidance set out by Burton J in Sinclair Roche & Temperley v Heard and Fellows [2004] IRLR 763, I am confident in the professionalism of this learned Chairman, and I see no reason why he should not, if he is able to and available, conduct the remitted hearing of the claim against the Secretary of State. Indeed, since a review application under rules 34 and 35 would in the normal way go to the Chairman who heard the original case, and he has now been involved with it for some time, I think it is positively desirable that he should.
19. I understand the point that Mr Carr made that the Claimants feel that the Chairman has reached a wrong decision on three occasions, but that seems to me a rather harsh criticism. He reached the decision he did on the first two occasions because he only had the submissions of Mr Innes before him. He did, as I think, make an order with inappropriate wording but he was not to know that anyone would be affected by this. Since, in my view, the Claimants have been affected by it, and those of them who were manual workers have as a result so far been unfairly denied a remedy, I am, as I say, confident that had he had the full facts before him he would have worded the order in a different way.
20. Accordingly, the appeal against the decision of the Tribunal of 3 April 2007 is allowed, and the case number 2800240/2007 and linked cases are remitted to the Employment Tribunal at Sheffield for further proceedings consistent with the judgment which I have given.