Appeal No.UKEAT/0631/04/DA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 29 November 2004

Before
HIS HONOUR JUDGE RICHARDSON
MRS R CHAPMAN
MR S M SPRINGER MBE

MRS S J HARDY	APPELLANT

TOURISM SOUTH EAST	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR TOM LINDEN
(of Counsel)
Instructed by:
UNISON
Employment Rights Unit
1 Mabledon Place
London
WC1H 9AJ	
For the Respondent	No appearance or representation by or on behalf of the Respondent	

SUMMARY

Collective redundancies – duty to consult

The Tribunal erred in law in holding that the employer was not “proposing to dismiss” as redundant more than 20 employees.  On the true construction of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 the employer did propose to dismiss more than 20 employees.  The employer’s hope that it might be able to redeploy certain employees to different jobs at different locations (for which they would have to apply) did not suffice to alter this conclusion.  Appeal allowed.  Finding substituted that the employee’s complaint was well founded.  Case remitted to the Tribunal to consider protected award.

HIS HONOUR JUDGE RICHARDSON

1.	This is an appeal by Mrs Sarah Jane Hardy against a Decision of the Employment Tribunal, sitting Ashford entered in the Register on 14 June 2004.  Mrs Hardy claimed that her former employers, the South East England Tourist Board (hereafter “TSE”) failed to inform and consult the workforce about proposed redundancies, contrary to section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992.  The Tribunal dismissed her claim.

2.	The appeal has been argued today on behalf of Mrs Hardy by Counsel, Mr Linden.  On behalf of TSE there is a Skeleton Argument by Counsel, Mr Doughty.  But TSE have not appeared or been represented today.  By letter dated 24 November TSE’s solicitors wrote: 

“Our clients continue to oppose Ms Hardy’s appeal but, having considered this carefully, wish to avoid incurring further expense.  They have therefore informed us that they do not wish to appear or be represented at the hearing on Monday. 
They would therefore respectfully request that the Tribunal consider the Respondent’s case on the basis of the Answer and the Respondent’s Skeleton Argument submitted to the Tribunal on 30th October 2004.”

This we have done.

The background 

3.	TSE is an organisation formed to promote tourism.  It is funded partly by local authorities, partly by grants and partly by membership subscriptions.  After a merger in 2003 it had two main offices – one at Eastleigh in Hampshire, the other at Tunbridge Wells in Kent.  These offices are about 100 miles apart.

4.	In December 2003 TSE decided that it was necessary to restructure the business.  On 30 January 2004 TSE announced details of the restructuring as it affected the Tunbridge Wells office.  The Tunbridge Wells office was to be closed as part of the restructuring.  There were, in total, 26 employees at that office including Mrs Hardy.  All would need to be dismissed as redundant or redeployed.  Mrs Hardy’s complaint, promptly brought on 27 February, was that TSE did not comply with section 188 of the 1992 Act at all.  This TSE accepts.  TSE says that it was not proposing to dismiss as redundant 20 or more employees at the same establishment.

Relevant provisions of the 1992 Act

5.	Part IV of the TULR(C)A is concerned with industrial relations.  Chapter II is concerned with procedure for handling redundancies:

“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 so dismissed.
(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 the dismissals takes effect.
(2)  The consultation shall include consultation about ways of—
(a)	avoiding the dismissals,
(b)	reducing the numbers of employees to be dismissed, and
(c)	mitigating the consequences of the dismissals,
and shall be undertaken by the employer with a view to reaching agreement with the appropriate representatives.

195 Construction of references to dismissal as redundant etc
(1) In this Chapter references to dismissal as redundant are references to dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related.
(2) For the purposes of any proceedings under this Chapter, where an employee is or is proposed to be dismissed it shall be presumed, unless the contrary is proved, that he is or is proposed to be dismissed as redundant.

298 Minor definitions: general
In this Act, unless the context otherwise requires—
…
“dismiss”, “dismissal” and “effective date of termination” , in relation to an employee, shall be construed in accordance with Part X of the Employment Rights Act 1996;”

Section 95(1)(a) of the Employment Rights Act 1996 provides:

“95 Circumstances in which an employee is dismissed
(1) For the purposes of this Part an employee is dismissed by his employer if (and, subject to subsection (2) and section 96, only if)- 
(a)	the contract under which he is employed is terminated by the employer (whether with or without notice)….”

The Collective Redundancies Directive

6.	It was not suggested by either counsel that it was necessary to have recourse to the Collective Redundancies Directive (98/59EC) in order to determine the issue before us.  We note that the Directive applies where an employer is contemplating collective redundancies: Article 2.1.  “Collective redundancies” is defined by reference to the concept of dismissal: Article 1(a). 

The Tribunal’s Decision 

7.	The Tribunal held that the office in Tunbridge Wells constituted a separate establishment for the purposes of section 188.  That finding was important, because it was contended by Mrs Hardy that Eastleigh (where there were also some redundancies) and Tunbridge Wells should be taken together.  This finding was challenged in the Notice of Appeal, but that ground had not been pursued before us. 

8.	The Tribunal’s findings of fact are short.  There are no precise findings as to the contracts of employment or job descriptions of the 26 persons at the Tunbridge Wells office, or even of Mrs Hardy.

9.	The Tribunal’s key finding for the purposes of this appeal is in paragraph 11 (3) of its Decision.  It found:

“Although there were 26 employees at the Tunbridge Wells office which was to be closed as part of the restructuring, the Respondents then only expected 12 redundancies with the remainder being redeployed.  This estimate was speculative, as the staff had not been consulted about the proposed scheme.  Accordingly, the best information available was the manager’s views of how staff might be expected to react.  By 4 March, after the first round of consultation the number of expected redundancies had reached 19.  By 8 March, which was the end of the consultation period, it had reached 20, though three of those did not fall within the 90 day period.”

It is clear that the Tribunal was considering the proposals of TSE as at 30 January, which was the date when it announced details of the restructuring of its operations in Tunbridge Wells.

10.	The Tribunal do not make any findings as to the proposed redeployments.  But three things are, in our judgment, clear from the memo dated 29 January which was supplied to employees at Tunbridge Wells.  Firstly, employees would have to apply for available vacancies: see paragraphs 4 and 5 of that memo. Secondly, the vacancies had new and different job descriptions.  Thirdly, the vacancies were either at Eastleigh 100 miles away, or jobs at a new sub-regional office yet to be created.  Mrs Hardy was employed to work at the Tunbridge Wells office: see TSE’s letter dated 18 March 2004, accompanying the Notice of Appearance.  It was not suggested on TSE’s behalf that there was any mobility clause entitling them to move her.

11.	The Tribunal, having reached the finding of fact which we have quoted, concluded that the numbers TSE was “proposing to dismiss” did not reach the requisite number of 20. 

“Proposing to dismiss”

12.	On behalf of Mrs Hardy, Mr Linden’s principal submission is that on the Tribunal’s findings, the proposal to close the Tunbridge Wells office was necessarily a proposal to dismiss more than 20 employees as redundant.  It was inherent in the proposal that existing contracts of employment would terminated on closure.  There would, therefore, be dismissals in the sense used in Hogg v Dover College [1990] ICR 39.  The reason for those dismissals would be redundancy.  The fact that it was hoped that some of the displaced employees would apply for, and be offered, different jobs in different parts of the organisation, and in different locations, did not alter this conclusion.  In support of this submission he says that his analysis is consistent with what is contemplated by the collective consultation provisions in the 1992 Act.  Consultation should include discussion of ways of avoiding dismissal and/or reducing the number of employees dismissed.  The legislative structure would be fundamentally undermined if the employer were able to argue that although it was proposed that 26 employees at a given establishment would lose their existing jobs, there was no obligation to consult because it was hoped that the number could be brought below 20 through redeployment.  On the contrary, the legislation specifically contemplates that redeployment will be one of the issues discussed in the course of the consultation.

13.	Mr Linden submits as an alternative to his principal submission on this point that in any event it was sufficient for there to be a relevant proposal that TSE intended that if fewer than seven employees sought, and were offered, redeployment, all 26 staff at the Tunbridge Wells office would be dismissed.

14.	In his Skeleton Argument on behalf of TSE, Mr Doughty accepts that if an employer is proposing to impose terms which are so radically different to the existing contract of employment that they amount to a complete removal or withdrawal of the old contract, then the employer is proposing to dismiss.  That, he says, is Hogg v Dover.  But, he submits, TSE had no such proposals in this case.  They were proposing that a number of employees would be redeployed to a sub-regional office which would be opened close to Tunbridge Wells.  That was not such a large change to the employees’ contracts of employment as to amount to a withdrawal of the old contract.

15.	In our judgment an employer proposes to dismiss an employee for the purposes of section 188(1) if what he proposes amounts to a proposal to terminate the contract of employment of that employee: see the definition of “dismiss” in section 298 of the 1992 Act, importing the definition in section 95 of the Employment Rights Act 1996, and see GMB v Man Truck & Bus UK Ltd [2000] ICR 1101 at 1104.  This is the essential question which a Tribunal must ask and answer if an employer says that he was not proposing to make an employee redundant because he was proposing to redeploy the employee.
16.	In Hogg v Dover College [1990] ICR 39 it was held that there could be a dismissal even though an employee remained employed by the same employer if the employer brought one contract of employment to an end and re-engaged the employee on another.  In Alcan Extrusion v Yates [1996] IRLR 327 this Employment Appeal Tribunal considered what might amount to a termination under what is now section 95(1)(a):

“23.	We entirely agree with counsel for the appellants that it is only where, on an objective construction of the relevant letters or other conduct on the part of an employer, it is plain that an employer must be taken to be saying, ‘Your former contract has, from this moment, gone’ or ‘Your former contract is being wholly withdrawn from you’ that there can be a dismissal under s.55(2)(a) other than, of course, in simple cases of direct termination of the contract of employment by such words as ‘You are sacked’.  Otherwise, we agree with him the case must stand or fall within s.55(2)(c).
24.	However, in our judgment, it does not follow from that that very substantial departures by an employer from terms of an existing contract can only qualify as a potential dismissal under s.55(2)(c).  In our judgment, the departure may, in a given case, be so substantial as to amount to the withdrawal of the whole of the contract.  In our judgment, with respect to him, the learned judge in Hogg was quite correct in saying that whether a letter or letters or other conduct of an employer has such an effect is a matter of degree and, we hold accordingly, a question of fact for the industrial tribunal to decide.  We fully accept that in many cases to construe letters or other conduct on the part of an employer which puts forward no more than variations in a contract of employment as amounting to a termination or withdrawal of such a contract would be quite inappropriate and wrong.  But in our judgement, counsel for the appellants was driven to the untenable position, as we believe it to be, that even very substantial departures from an original contract of employment could never amount, on an objective construction, to the termination of the original contract and its replacement by the offer of a different and inferior contract of employment but must always be characterised as breaches of the original contract.”

17.	In our judgment, therefore, an employer “proposes to dismiss” an employee if on an objective consideration of what the employer says or writes, the employer is proposing to withdraw the existing contract of employment from the employee, or the departures which the employer is proposing from the existing contract are so substantial as to amount to the withdrawal of the whole contract.

18.	It follows from what we have said that the mere fact that an employer proposes to redeploy an employee is not decisive.  If the employer only proposes to keep the employee in his employment on what is in reality a different contract of employment, he will be proposing to terminate the existing one.

19.	In our judgment the Tribunal has not addressed this essential question.  So far as can be discerned from its reasoning it has assumed that if the employer was proposing to redeploy it was not proposing to terminate the contract of employment.  Such an assumption is wrong.  Whether the employer was proposing to terminate the contract of employment will depend on the terms of the contract of employment and upon the terms of the proposed redeployment and the circumstances in which it is offered.

20.	We reach this conclusion readily, because we agree with the submission of Mr Linden that if the Tribunal’s approach was correct, the legislative structure would be fundamentally undermined.  It is a purpose of collective consultation that it should include discussion of ways of avoiding dismissals and reducing the number of employees dismissed.

The outcome of the appeal 

21.	Mr Linden submits that this Appeal Tribunal can substitute its own view for that of the Tribunal on the question whether TSE proposed to dismiss more than 20 employees as redundant.  He also submits, boldly, that having regard to the admitted fact that there was no consultation this Appeal Tribunal can go on to declare the length of the protected period for the purposes of section 189 of the 1992 Act.

22.	On the question whether TSE proposed to dismiss more than 20 employees within the 90 day period we agree with him.  Once the correct legal test has been identified it appears to us to admit of only one answer on the material before us.  The proposal was that all 26 employees at Tunbridge Wells would lose their jobs.  Some might be redeployed – but if so it would be to jobs for which they would have to apply, in one of two different locations, with fresh job descriptions.  Contrary to the submission of Mr Doughty, we do not accept that there needs to be a remission to the Employment Tribunal on this point.

23.	It is also plain, in our judgment, that the proposal was to dismiss within 90 days: see the memo dated 29 January 2004, with its timetable.  Mr Doughty pointed out in his Skeleton Argument that as matters developed, some employees were dismissed after the 90 day period. Nevertheless, the focus of the legislation is upon the proposal of the employer.  The proposal of the employer was to dismiss within a 90 day period.  On this issue also we accept Mr Linden’s submission that we can properly reach our own conclusion.  We will therefore allow the appeal and substitute a finding that Ms Hardy’s complaint was well founded.

24.	However, we do not think it would be permissible for us to set the length of the protected period or otherwise deal with the question of remedies under section 189.  We sympathise with Mr Linden’s submission that TSE has not appeared today or addressed argument to questions of mitigation.  But the role of the Appeal Tribunal on a question of this kind is limited.  The Court of Appeal has given guidance concerning the fixing of the protected period in Susie Radin Ltd v GMB [2004] IRLR 400.  The setting of the period, having regard to the guidance of the Court of Appeal, is very much a matter for an employment tribunal.  This stage was never reached at the Tribunal.   TSE must, in our judgment, have an opportunity to be heard on the issue, in particular as to any mitigating circumstances that might exist.  It follows, therefore, that questions of remedy under section 189 of the 1992 Act will be remitted to the Tribunal.