Lesney Products & Company Ltd v Nolan

JurisdictionEngland & Wales
Judgment Date19 October 1976
Judgment citation (vLex)[1976] EWCA Civ J1019-1
Docket Number1976 Nos. Eat/16/76 & Eat/105/76
CourtCourt of Appeal (Civil Division)
Date19 October 1976

[1976] EWCA Civ J1019-1

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the Employment Appeal Tribunal


The Master of the Rolls

Lord Justice Stephenson and

Lord Justice Shaw

1976 Nos. Eat/16/76 & Eat/105/76
Lesney Products & Co. Ltd.
G. Nolan, C. Grech, D. Butler & D. Massey and A.J. Loan & T.W.H. Harman

MR. J. HARVEY Q.C. and MR. D. ELLIS (instructed by Messrs. Ellis & Fairbairn, Claude Barker & Partners, Solicitors, Watford) appeared on behalf of the Appellants.

MR. R. TURNER (instructed by Messrs. Robin Thompson & Partners, Solicitors, London) appeared on behalf of the Respondent.


This is a very difficult case. It arises under the Redundancy Payments Act. The firm of Lesney produces little model toys for children. They have factories in several places. This case concerns the factory in Lee Conservancy Road Hackney.


Early in 1975 there had been a falling off in sales. So the firm had to look round for some means of covering their output and reducing their staff. They did it by re-organising the way the work was done.


There were two kinds of work. One kind was called the "direct" work. This was done by 200 or 300 women. They handled the little toys as they came out of the machines, assembling them, putting them together, labelling them and so forth: and afterwards packing them up for despatch. This work was done in three shifts, day, evening and night shifts.


The other kind of work was called the "indirect" work. This was done by about 36 men. They were machine setters. They were skilled fitters who looked after the machines, maintained them and saw that they were working properly. They covered their work in two shifts. One shift covered the day and evening shift of the "direct" operatives, doing very long hours of overtime. The other shift covered the night shift of the direct operatives.


The reorganisation took this form: The company cut out the night shift of "direct" operatives altogether. And also the night shift of the indirect operatives. That achieved a considerable lowering of output and saved costs. But we are not concerned with that change. It has all been dealt with.


We are only concerned with the re-organisation of the day shift and its effect on the "indirect operatives", that is, the machine setters. Before April 1975, there were 35 machine setters. There was one day shift. It started at8 O' Clock in the morning and went on until 5 O' clock at night for four days a week, Mondays to Thursdays: on Fridays from 8.00 a.m. to 2.30 p.m., but also on Fridays a further two hours at overtime rates from 2.50 p.m. to 4.30 p.m. In addition after the end of a normal day's work many of the men would work overtime until 10 O' clock at night, and of course at overtime rates. So there was one day shift with very long hours of overtime.


That was the position until April 1975. The company then re-organised the work of these 36 machine setters. Instead of these 36 machine setters working one day shift plus long overtime they changed over to a double-day shift, that is two shifts a day. One shift would work from 7.30 a.m. until 3.30 p.m. and the other shift would work from 2.00 p.m. until 10.00 p.m., and the men would work alternative shifts week by week. That was the proposed re-organisation. The company said they did it in order to organise their work more efficiently.


Those terms were offered to all 36 machine setters. They were asked to stay on in this new situation whereby they would work two day shifts instead of one shift with extensive overtime. Nine agreed to stay on on those terms, 27 refused and were dismissed, but subsequently 18 of those 27 changed their minds and came back. But still there were nine who refused to take the opportunity of working under this new system. Because of their refusal, they were dismissed. Out of those 9, six of them claimed, first, for unfair dismissal; but that claim could not succeed because the conduct of the employers was entirely reasonable and there were good reasons for re-organising the business in this way. Then they claimed redundancy payments. They claimed it on the ground that there was a redundancy situation because the requirement of the business for their kind of work had diminished. They said that they were entitledto redundancy payments under section 1(2)(b) of the Redundancy Act 1965.


Four men came before one tribunal and two before another, and both tribunals found in favour of the men for redundancy payments. There was an appeal by Lesney Products before the new Employment Appeals Tribunal, presided over by Mr. Justice Phillips. The Appeal Tribunal thought that there were well-founded criticisms of the decisions of the tribunals and that it was difficult to understand exactly the reasons on which the decisions were based: but, on the whole, they felt that the Appeal Tribunal should not interfere, bearing in mind the burden of proof which is laid on the employer under section 9(1)(b) of the Act. But in view of the difficulties, the Tribunal reserved their decision and the reasons for it, and gave leave to appeal.


Now the matter comes before this court. I must say that it is a difficult case. The relevant principles were stated by this court in Johnson v. Nottingham Combined Police Authority (1974) 1 weekly Law Reports 358 saying at page 362: "It is settled by those cases that an employer is entitled to re-organise his business so as to improve its efficiency and, in so...

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