Appeal No. EAT/223/91

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
	On 10 February 1993
	& 11 February 1993
	Judgment delivered on 19 February 1993

	Before

	THE HONOURABLE MR JUSTICE MAY

	MRS E HART

	MRS M E SUNDERLAND JP

	

MANIFOLD INDUSTRIES LTD	APPELLANTS

MR G E SIMS & 18 OTHERS	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR D BALCOMBE
	(of Counsel)
	Messrs Fishers
 	Solicitors
	74 High Street
	Swadlincote
	Derbyshire
	DE11 8HS

For the Respondents	MR J BEGGS
	(of Counsel)
	Messrs Rowley Ashworth
	Solicitors
	247 The Broadway
	Wimbledon
	London
	SW19 1SE

	MR JUSTICE MAY:   In late 1988 and early 1989, Manifold Industries Limited, the Appellants, were losing business.  Their customers were complaining that their products were too expensive and their delivery times too long.  They accordingly decided to take steps intended to increase productivity and reduce costs.  To this end, they engaged Midlink Business Consultancy Service to carry out a work study.  This was intended to produce information relating to the capacity of machines and to job times for use in formulating a new incentive bonus scheme and improving efficiency.

	The Appellants sought and initially obtained a measure of co-operation with the study from the recognised Union, the Amalgamated Engineering Union.  In November 1988, Midlink carried out a preliminary Activity Sample which reported poor factory efficiency.  In January 1989, the AEU rejected the Midlink results.

	On 31st March 1989, the Appellants gave 6 months' notice to terminate the Procedural Agreement by which they gave recognition to the AEU.

	On 1st May 1989, the Appellants produced a Manufacturing Strategy Implementation Programme.  This was a bar chart with a number of sections.  Section 5 concerned a "New Payment by Results Incentive Scheme".  This provided for a 19 week measurement task by Midlink starting in the last week in May 1989, the preparation of proposals for a new bonus scheme, and consultation and negotiation with the AEU leading to agreement of the new scheme.  Section 14 of the bar chart concerned "New Contracts of Employment".  The penultimate bar of this section is flagged "Staff accept new C. of E. or Dismissal".  Mr Balcombe, Counsel for the Appellants, accepts that this indicates an intention by the Appellants to impose new contracts upon their workforce unilaterally, if necessary, and to dismiss those employees who did not agree.  The progress of Section 14 of the bar chart was not linked in time with Section 5.   The imposition of new contracts is shown to take place before the agreement of the incentive scheme, but the operative date of the new contracts is shown as 1st October 1989, which was the same date as that for the start of the implementation of the incentive scheme.  To that extent therefore the two operations were linked.  1st October 1989 is shown as the start of the year 1989/90 and was presumably the start of the Appellants' accounting year.

	The proposed Programme was presented to AEU representatives at a meeting in early May 1989.  The AEU said that they would not consult or negotiate on these issues unless management agreed to recognise the Union.  They stated a belief that the Strategy would be implemented whether they were consulted or not.  More generally, there was considerable resistance by the work force to the proposed Midlink work study.  There was a refusal to co-operate.  There is a factual dispute between the parties to this appeal whether such a refusal had gone beyond words, i.e. whether Midlink had got as far as trying to start their factory observations and employees were actually not co-operating with this.  (Counsel for each of the parties addressed submissions to us about whether an answer to this factual dispute could be gleaned from the Tribunal's reasons or from other material properly available to this Appeal Tribunal.)  However this may be, minutes of a meeting between management and the AEU on 10th July 1989, drafted by the Appellants, record that at that date "Management accepted that an individual could refuse to take part in a time study...".  The AEU Shop Stewards reported this statement to their members in a notice written on the same day which said that "Management advised the Shop Stewards that any individual has the right to refuse to take part in the "Midlink" survey if they so desire."  The notice recorded the position of the Union as being that they would not take part in the Midlink survey "since management have still not fulfilled their side of the October Wage agreement in relation to consolidation."  The notice also said "There is no requirement for any industrial action on our part."

	The AEU held a secret ballot under the heading "Refusal of the Company to abide by Agreements and Procedures negotiated with the AEU."  A majority was against taking part in a strike but in favour of taking part in action short of a strike.  The result of this ballot was communicated to the Appellants at a meeting on 11th July 1989.  It is the Appellants' factual case that at this meeting the AEU said that the action to be taken was non-co-operation with Midlink on the establishment of new job times with immediate effect subject to approval of the AEU District Committee and Executive.

	On 13th July 1989, the Appellants wrote to their employees saying that any industrial action was a breach of their contracts of employment and would make them liable to summary dismissal, and that, unless industrial action ceased by 10.00 a.m. on 18th July 1989, dismissal arrangements would be arranged immediately.  As we have already said, there is a dispute between the parties to this appeal whether industrial action had actually started or whether it had only been threatened.

	On 18th July 1989, the Appellants tried to interview each of their employees.  These interviews are central to this appeal.  The interviews were conducted with the aid of a prepared written piece of paper containing a series of three peremptory questions requiring yes or no answers.  Those who did not agree unequivocally in answer to these questions to co-operate with the Midlink time study were to be instantly dismissed.  A hand written schedule was prepared giving the results of the interviews which were carried out.  It has a column of comments which is in part difficult to read.  The precise way in which these interviews were conducted and how the employees responded to the questions clearly is or would be a matter of fact to be determined by evidence.

	As a result of these interviews, a number of employees were dismissed.  The interview process and the dismissals quickly led to a complete stoppage of work in the factory followed by a walk out.   The Appellants then sent letters dated 18th July 1989 to employees including most of the Respondents to this appeal asserting that they had been taking part in industrial action, referring to the letter of 13th July 1989, saying that they had failed to attend an interview on 18th July 1989 and assuming that, unless they told the Managing Director personally by 12.00 noon on 19th July 1989 to the contrary, they were confirming their participation in the asserted industrial action.  Otherwise, the letters said, they would be dismissed. These letters may or may not have arrived by 6.00 a.m. the following morning and may or may not have then been seen by the people to whom they were addressed.  At all events, on 19th July 1989 most of the Respondents to this appeal did not give the confirmation which the Appellants' letter required and refused to work.  The Appellants thereupon dismissed them by letters dated 19th July 1989.  The two Respondents who were on holiday were dismissed subsequently.  It is agreed that their cases raise the same issues as the cases of the other 17  Respondents.

	Six of the employees who had been dismissed on 18th July 1989 made complaint to the Industrial Tribunal of unfair dismissal as did the 19 Respondents to this appeal.  In relation to this appeal, an Industrial Tribunal at London (South) conducted hearings on 7th, 8th and 14th November 1990 to determine the preliminary question whether, at the time the 19 employees were dismissed, the management were conducting a lock-out or the relevant employees were taking part in a strike or other industrial action.  This issue was agreed to arise under section 62 of the Employment Protection (Consolidation) Act 1978.  Section 62(2) would in these cases preclude claims for unfair dismissal unless it were shown that one or more "relevant employees" of the Appellants had not been dismissed.  The definition of "relevant employees" in section 62(4)(b) differs depending on whether the Appellants were conducting a lock-out or the Respondents were taking part in a strike or other industrial action, such that it is agreed that in these cases the Respondents' claims are not precluded if there was a lock-out but are precluded if there was a strike.   

	Preliminary points had also arisen in the proceedings relating to the six employees.  In their cases the Industrial Tribunal found in favour of the employees.  We are told that the employer appealed against that decision; and that the Employment Appeal Tribunal allowed the appeal and remitted the case to the Industrial Tribunal for further consideration; but that regrettably that further consideration has yet to take place in part because one of the Members of the Tribunal has been unwell.  The constitution of the Tribunal which heard the cases of the six employees was the same as that which heard the cases of the 19 with whom this appeal is concerned.  We have the reasons for the decisions of both Tribunals.  It is agreed that primary facts in the reasons of the first hearing - that concerned with the 6 employees - are properly available for us in this appeal although we must remember, of course, that the reasoning and conclusions from those facts were not upheld on appeal and that the case has been remitted.

	At the hearing of the cases of the 19 employees who are Respondents to this appeal - the second hearing - evidence was called on behalf of the Appellant employers and there were a lot of documents which we have.  The Respondent employees did not give evidence.  The Tribunal, of course, had the benefit of having heard the evidence at the first hearing.  We have the Chairman's Notes of Evidence of the second hearing.

	The Tribunal held that, at the time of the dismissal of the 19 Respondents (i.e. when they received the letter dated the 19th July 1989), the Appellants were conducting an actual lock-out, alternatively that there was a "constructive lock-out".  The Tribunal's Full Reasons were sent to the parties on 8th April 1991.  We note with the greatest concern that this appeal has taken 22 months to come on for hearing.

	The question whether something is a strike or a lock-out is to be decided on the particular facts of each case - see Express & Star Ltd v Bunday [1988] ICR 379 at 387, where May L.J. said:
" For present purposes I merely quote that in [sc. from] the Shorter Oxford English Dictionary, because it seems to be most modern of the editions to which our attention was drawn.  It defines a "lock-out" as:  

"An act of locking out a body of operatives; i.e. a refusal on the part of an employer, or employers acting in concert, to furnish work to their operatives except of conditions to be accepted by the latter collectively."

For my part I would again be prepared to accept this dictionary definition as at least a reliable indication of what does constitute a lock-out in modern industrial relations.  Nevertheless, I think that it would be wrong to treat the dictionary definition as if it were expressly contained in a statute and to seek to apply it word for word to any problem which may arise in this context.  As has already been pointed out, each of these cases must be decided on its own facts and merits and, as will appear, subject to what I have already said, I have no doubt that the best appreciation of what is or is not a strike or lock-out will come from either an industrial tribunal, or on appeal from the Employment Appeal Tribunal, highly experienced in these matters, as these bodies respectively are."
	
	Mr Balcombe argues on behalf of the Appellants that, in contrast with constructive dismissal which is recognised in section 55(2) of the 1978 Act, a "constructive lock-out" does not have any foundation in statute and is not a state of affairs known to the law.  He referred us to Marsden v Fairey Stainless Ltd [1979] IRLR 103 at 105 for the proposition that, for the purpose of provisions in the Trade Union and Labour Relations Act 1974 equivalent to those in section 62 of the 1978 Act, "there cannot enter into consideration any question of an engineered strike."  Mr Beggs, on behalf of the Respondents, does not formally concede that Mr Balcombe is correct in this argument, but he advanced no argument in support of this alternative part of the Industrial Tribunal's reasoning and informally in effect concedes that it cannot be supported.  He tells us that "constructive lock-out" was only part of the Respondents' case before the Industrial Tribunal to the extent that other Counsel with whom he was instructed may have gone along with an argument picked up by the Tribunal.  We are satisfied that this decision cannot be upheld on the basis of "constructive lock-out".  

	In considering whether there had been an actual lock-out, the Industrial Tribunal considered Express & Star v Bunday and determined in paragraph 13 of their Reasons, that they had to consider for a lock-out whether:
"... there has been some action on the part of the employer not justified by the employees' conduct which amounts to a refusal by the employer to continue to employ the employees on the terms and conditions of the contract of employment then existing between the employer and the employees bearing in mind that there cannot be a unilateral variation of such terms and conditions." 

	Mr Beggs does not, as we understand it, quarrel with this formulation, nor with the Industrial Tribunal's subsequent formulation, in their paragraph 14, of what constituted a strike.  

	In summary, the Industrial Tribunal's conclusions of fact were that on the afternoon of 18th and in the morning of 19th July 1989 the applicants were engaging in strike action; that the Appellants' letters of 18th July 1989 stipulated that an employee's employment would only continue if he stopped industrial action and co-operated in the time study; that co-operation in the time study would at a later date result in new terms and conditions being imposed in the contracts of employment; that accordingly insistence on co-operation with the time study amounted to a refusal by the employer to allow the employee to work except on new and substantially different terms and conditions so that the Appellants' letter turned the strike into a lock-out.

	Mr Balcombe submits that this line of reasoning is wrong in law and/or is a perverse finding of fact.  He submits that the employers' requirement that the respondents co-operate with the work study was a legitimate requirement under the Respondents' then existing contracts of employment.  He referred us to the written contract of employment and the Procedural Agreement with the AEU referred to in the form of contract.  He submits, with reference to Express & Star v Bunday [1988] ICR 379 at 391, that an employer who insists that his employees adhere to their existing contracts and refuses to permit them to work unless and until they are willing to do so cannot be said to have locked them out.  Accordingly, the Industrial Tribunal, he submits, erred in law in finding that there was a change from a strike to a lock-out since on analysis the letters of 18th July 1989 did no more than insist on adherence to the existing contracts.  He further submits that, even if the Appellants may have made it clear that they were moving towards the imposition unilaterally of new contracts of employment, that stage had not been reached and it was not inevitable that it would be reached.  He submits that, just as there is a distinction between a threat of industrial action and actual industrial action (see Midland Plastics v Till 1983 IRLR 9), so there is a distinction between a threat of a lock-out and an actual lock-out.

	Again, Mr Beggs offered no more than formal opposition to these submissions which are, in our view, correct in law.  It follows that the decision of the Industrial Tribunal cannot stand upon the reasons which they gave.

	Mr Beggs, however, seeks to uphold the actual decision upon different grounds or, if that cannot be achieved on this appeal asks us to remit the case to a differently constituted Tribunal for a fresh hearing to determine facts necessary to determine the different grounds.  (Mr Balcombe agrees that, if the case is to be remitted, it should go to a differently constituted Tribunal for a fresh hearing).  In advancing this argument, the Respondents formally need leave to amend out of time their Answer to the Appeal.  Mr Balcombe did not oppose the grant of such leave provided that he had adequate time to deal with the substantive argument, which in the event he agreed he had had by the second day of the hearing of the appeal.  We have accordingly entertained Mr Beggs' argument.

	The essence of Mr Beggs' different grounds is the submission that a lock-out occurred by virtue of the circumstances, manner of conducting and content of the interviews undertaken by the Appellants on 18th July 1989.  He describes these interviews as a requirement to submit to a "kangaroo court".  He submits that on 18th July 1989 the Appellants intended to interview every employee using a prepared three question script and intending to insist on a yes or no answer to questions which in all the circumstances admitted of no such monosyllabic answer.  The wrong answer or a failure to answer was inevitably to result in instant dismissal.  The first Tribunal found that these interviews were intimidatory and wholly inadequate to find out the employees intentions.  Each interview was carried out in breach of the Appellants' legal obligations under the employees' contracts of employment which, among other things, gave the employees rights of representation.  On 18th July 1989, the Appellants interviewed about twenty employees and instantly dismissed ten of them.  In reality, Mr Beggs submits, the Appellants were refusing to allow the Respondents to work except on condition that they submit to intimidatory "dismissal" interviews which interviews were in breach of contract.  This was a condition which was imposed by the management collectively on all its employees from the moment it started the interview process.  Accordingly,  there was in law a lock-out from that point.

	Mr Beggs tells us that this was the Respondents' main case before the Industrial Tribunal.  (Mr Balcombe did not disagree with this.)  Mr Beggs submits that regrettably the Tribunal found in his clients favour on other grounds without dealing with this main ground and, importantly, without addressing their factual findings to that argument.  Mr Beggs would in principle be content for us to deal with his argument upon the facts found provided they were adequate for that purpose but his preferred analysis is that we cannot do that for want of sufficient factual findings.

	Mr Balcombe accepts that the first Tribunal were highly critical of the interview process.  But he points out that the second Tribunal found as a fact that the interview process led to a strike and he submits that they must by implication have found that, despite their criticism, the holding of the interviews did not amount to a lock-out.  For Mr Beggs' argument to succeed it is not, he submits, sufficient for the Respondents to show that the second Tribunal could have arrived at a different conclusion.  They must show that the finding of fact that there was a strike was perverse.  Mr Balcombe then submits that, if you look at the interview process in context rather than in isolation, the Tribunal's implied finding against a lock-out should not be seen as perverse.  He took us in reply through the details of that context by reference to the Tribunal's reasons, the documents and the evidence as recorded in the Chairman's notes.  He reminds us that none of the Respondents chose to give evidence before the Industrial Tribunal.  In the result, he invites us to allow the appeal leaving in substitution for the Tribunal's decision their finding of fact that there was a strike and holding that in law and upon the Tribunal's factual findings it continued to the time when the Respondents were dismissed.

	The trouble is that the Tribunal's Reasons simply do not address what we are told was the Respondents' main argument in relation to the interviews.  The best that Mr Balcombe can do is to rely on an implied rejection of the argument.  In our view, it would not in these circumstances be proper or fair to accede to Mr Balcombe's argument.  A finding of what is in any event derivative fact (i.e. that the situation in the afternoon of 18th July 1989 amounted to a strike) reached by a process of reasoning which ignores the main argument in support of a contrary conclusion cannot, in our view, properly stand without a proper examination and analysis which does address that argument.  We regret to conclude that we do not feel able to undertake that examination and analysis on this appeal.  The more we were invited to consider the facts by reference to the material properly available to us, the more it appeared that we should be carrying out a fact finding operation not appropriate to this Appeal Tribunal.  We do not consider that the Respondents main argument is bound to fail - we say no more that this - upon due consideration by reference to all facts relevant to it.  We consider that the Respondents are entitled to have their main argument considered and that the only proper means of doing this is by remission.

	For these reasons, we allow the appeal and remit the case for consideration afresh upon new evidence by a differently constituted Tribunal.  In one respect we do this with undisguised regret, since we are appalled that this rehearing of a preliminary point only will be taking place so long after the events with which it is concerned.  For this reason, we urge that the rehearsing should take place just as soon as is possible.