Baxter & Others v Limb Group of Companies
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waite,Lord Justice Steyn |
| Judgment Date | 30 June 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J0630-9 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | No. EATRF 93//1228/B |
| Date | 30 June 1994 |
[1994] EWCA Civ J0630-9
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
(ON APPEAL FROM THE EMPLOYMENT TRIBUNAL)
Before: Lord Justice Dillon Lord Justice Steyn and Lord Justice Waite
No. EATRF 93//1228/B
MR. P CLARK and MR. K. BRYANT (instructed by Messrs. Pattinson & Brewer, London) appeared on behalf of the Appellants.
MR. J. HAND QC and MR. W. BIRTLES (instructed by Messrs. Eversheds, Hepworth & Chadwick, London) appeared on behalf of the Respondents.
This appeal arises from the dismissal on 2nd April 1990 of 26 dock workers formerly employed at Goole in North Humberside. The dismissal came as the culmination of a long running dispute between the dockers and their employers about traditional working practices which the employers wanted to abolish and the employees to retain. Negotiations were protracted but fruitless. The employees took industrial action by refusing to work overtime. They continued the ban after the employers had warned them that it might lead to their dismissal. The employers in due course dismissed them summarily. As the result of a decision by the employers thenceforth to discontinue the use of direct labour altogether, they were neither re-engaged nor replaced. The management preferred to put the work of loading and unloading vessels out to associated companies within their group and pay a service charge instead of wages. When the men later asked the employers to state the reason for their dismissal, they were told that they had been dismissed for taking part in industrial action after a warning that the continuance of the action might result in dismissal.
The dismissed men brought claims in an Industrial Tribunal which they expressed as claims for redundancy payments and/or compensation for unfair dismissal. So far as their claim rested on unfair dismissal, they based it on a charge against the employers of bad faith: using the industrial dispute, that is to say, as a colourable pretext for dismissing their workforce ostensibly on grounds of participation in industrial action, but with the real motive of escaping liability for the redundancy payments for which the termination of their contracts wold in other circumstances have made the management liable. So far as their claim lay in redundancy, they asserted that at the moment of dismissal the employers' new policy of discontinuance of employment of direct labour had created a state of redundancy and that they had been dismissed on that ground.
The Industrial Tribunal felt it to be their duty to deal fully with the claims under both heads. In respect of the unfairness claim, they rejected the charge of bad faith. They held that the employers had acted genuinely in treating the overtime ban as industrial action and in purporting to dismiss the employees on that ground. So far as redundancy was concerned, the Industrial Tribunal found that the policy decision of the employers, implemented immediately after the dismissal, to discontinue direct dock labour and go over to contracted stevedore services from associated companies meant that at the moment of dismissal there was a redundancy situation, and they found that the employees had actually been dismissed wholly or mainly on grounds of redundancy.
The Employment Appeal Tribunal allowed the employers' appeal from that decision. They held, in effect, that the Industrial Tribunal's two findings —on the one hand that the dismissal had genuinely been for participation in industrial action and on the other hand that the dismissal had been wholly or mainly on grounds of redundancy —simply could not stand together: the two findings were mutually inconsistent. The applications were accordingly remitted to the Industrial Tribunal for a re-hearing.
From that decision the employees now appeal to this court, contending that there was evidence before the Industrial Tribunal on which it was entitled to find that the employees had been dismissed wholly or mainly for redundancy reasons, and that no error of law appeared on the face of their decision entitling the Employment Appeal Tribunal to interfere with that conclusion. The employers cross-appeal, contending that the Employment Appeal Tribunal was right to have set the Industrial Tribunal's decision aside but ought to have done so not on mere grounds of inconsistency but on the more fundamental ground that the tribunal's findings on the bad faith issue had so wholly precluded any possibility of a finding of redundancy as to make it impossible for any reasonable and properly directed tribunal to find redundancy as the cause of dismissal. On that footing, the decision of the Industrial Tribunal was so demonstrably wrong that there would be no point or purpose in directing a re-hearing.
The issues raised by the appeal and cross-appeal depend largely on the interpretation to be placed on the language used by the Industrial Tribunal when formally expressing their reasons. That language is not wholly clear. Hence the debate in the appeal tribunal and in this court as to what precisely the course of reasoning was which led to their finding that redundancy had supplied the reason for dismissal. The outcome is important for both sides. There has been no appeal by the employees from the Industrial Tribunal's alternative finding that if (contrary to their conclusion in favour of redundancy) the men were dismissed for taking part in industrial action their dismissal was effected in good faith and therefore fair. The consequence is that if the Industrial Tribunal's finding that redundancy was the reason for dismissal is upheld in this court the employees will receive redundancy payments amounting in the aggregate to £850,000. If it is not, the employees will receive nothing.
The law which the Industrial Tribunal was called upon to apply is laid down by the Dock Work (Compensation Payment Scheme) Regulations 1989 SI No 1111, enacted under the Dock Work Act 1989. Regulation 3 incorporates the universal definition of redundancy that has been in force in English employment law since the Redundancy Payments Act of 1965 and is now enacted in identical terms in S 195 of the Trade Union and Labour Relations (Consolidation) Act 1992. It reads:
3 (1) For the relevant purposes an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to -
(a) [this sub-section covers cases of actual or intended cesser of business or re-location and is not material to the present case] or
(b) the fact that the requirement of that business for employees to carry out work of a particular kind or for employees to carry out work of a particular kind in the place where he was so employed, have ceased or diminished or are expected to cease or diminish.
In this sub-paragraph "cease" means cease either permanently or temporarily and from whatsoever cause and "diminish" has a corresponding meaning.
The Industrial Tribunal was required to apply the statutory presumption, which (as set out in the then governing statute —S 91 (2) of the Employment Protection (Consolidation) Act 1978) provides:
"For the purposes of any such reference [i.e.reference to an Industrial Tribunal], an employee who has been dismissed by his employer shall, unless the contrary is proved, be presumed to have been dismissed by reason of redundancy."
As for case law, both sides accept that the relevant authorities are Sanders v Neale (1974) ICR 565 and Hindle v Percival (1969) 1 WLR 174. In Sanders case a number of the employees of a bookbinding company took industrial action (by placing a ban on voluntary overtime, industrial training and relief work) in protest against the making of two of their former colleagues redundant following closure of a department of the business. They were warned that if they did not undertake by a specified date to resume normal working they would be regarded as being in breach of their contracts of employment which would then be terminated. The undertaking was not given by the specified date, and the employers thereafter treated the employees involved in the action as dismissed. The Industrial Tribunal concluded that the employees were all dismissed at the specified date for refusing to give the undertaking, and not for reasons relating to redundancy. On appeal by the employees on the ground that the tribunal had erred in law in finding that the employees had been dismissed on the specified date because the employers' repudiation of the contracts of employment had not yet at that point been accepted by the employees, the National Industrial Relations Court held (dismissing the appeal) that the repudiation of a contract of employment was an exception to the general rule that an unaccepted repudiation did not discharge a contract. That holding no longer stands (following the decision of this court in ( LTE v Clarke 1981 ICR 355)) but both sides in this appeal have relied on the general observations of Donaldson J (unrelated to the repudiation issue) at pages 573 and 574 as follows:
"The first issue in a redundancy claim is whether the applicant was dismissed by the employer. What constitutes such a dismissal is set out in section 3 of the Act of 1965 and it is for the employee to prove the dismissal if it is not admitted. The second issue is whether the employee has been dismissed by reason of redundancy. Here it is for the employer to prove either that there was no redundancy situation or that the dismissal was neither wholly nor mainly attributable to that situation: see the presumption set out in section 9 (2) of the Act. He...
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