Secretary of State for Employment v Mann

JurisdictionEngland & Wales
Judgment Date30 September 1996
Judgment citation (vLex)[1996] EWCA Civ J0930-1
Date30 September 1996
CourtCourt of Appeal (Civil Division)
Docket NumberEATRF 95/1770/B

[1996] EWCA Civ J0930-1




Royal Courts of Justice


Lord Justice Neill

Lord Justice Millett

Lord Justice Phillips

EATRF 95/1770/B

(1) J.h. Mann
(2) S. Taylor
(3) D.g. Timms
(4) D. Souter
(5) J.m. Simpson
(6) A. Craig
(7) D. Potter
Appellants and/or Respondents in Cross-Appeal
Secretary of State for Employment
Respondent/Appellant in Cross-Appeal

MR. J. McMULLEN QC and MR. P. MEAD (instructed by Messrs. Brian Thompson & Partners, Newcastle upon Tyne) appeared on behalf of the Second to Seventh Appellants and/or Respondents to Cross-Appeal.

MR. P. ELIAS QC and MR. J. COPPEL (instructed by Messrs. Rowley Ashworth, London SW19) appeared on behalf of the First Respondent to Cross-Appeal.

MISS E. SHARPSTON (instructed by the Treasury Solicitor, London SW1) appeared on behalf of the Secretary of State for Employment.


Monday, 30th September 1996


Part I. Introduction.


This is the judgment of the court to which all the members of the court have made contributions.


The parties to these appeals are the Secretary of State for Employment and certain former employees of Swan Hunter Shipbuilding and Engineering Group Limited (the company). On 13 May 1993 administrative receivers were appointed over the company. On 28 May 1993 408 employees of the company, including the employees who are parties to these proceedings, were summarily dismissed for redundancy. All the employees who are parties were members of a recognised trade union.


At the date of these dismissals in May 1993 there were in existence a number of measures consisting both of Directives of the European Community and of Acts of the UK Parliament designed to provide some protection to employees against the financial consequences of


(a) Being declared redundant without any prior consultation between their employers and the relevant trade union; and


(b) The inability of an insolvent employer to pay sums to an employee due to him either as arrears of wages or otherwise.


These appeals are concerned with the extent of this protection and with the interrelationship between the UK legislation and the EC Directives.


In Part II of this judgment we shall set out the relevant legislative provisions, both of EC law and of UK law. In Part III we shall return to the facts and the decisions in the Industrial Tribunal and the Employment Appeal Tribunal. In the later Parts we shall deal in more detail with the three main questions which arise for consideration on these appeals.


Part II. The Legislative Provisions.


It will be convenient to consider first the group of legislation entitling an employee to recover compensation against his former employer if he is declared redundant without proper consultation.


By section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (the Act of 1992) a duty is imposed on an employer who is proposing to dismiss as redundant employees who are members of a recognised trade union to consult with the trade union as to the method of selecting the employees who may be dismissed and as to a number of other specified matters. If this consultation does not take place the trade union may make a complaint. Thus section 189 of the Act of 1992 provides:

"(1) Where an employer has dismissed as redundant, or is proposing to dismiss as redundant, one or more employees of a description in respect of which an independent trade union is recognised by him, and has not complied with the requirements of section 188, the union may present a complaint to an industrial tribunal on that ground."


It is further provided by section 189 (2) and (3) that if the tribunal finds the complaint well founded it shall make a declaration to that effect and may also make a protective award whereby the employer is ordered to pay remuneration for "the protected period". The protected period is specified, so far as is material, in section 189(4) as follows:

"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…."


Section 190, which provides for entitlement under a protective award, is in these terms:

"(1) Where an industrial tribunal has made a protective award, every employee of a description to which the award relates is entitled…to be paid remuneration by his employer for the protected period.

(2) The rate of remuneration payable is a week's pay for each week of the period and remuneration in respect of a period of less than one week shall be calculated by reducing proportionately the amount of a week's pay."


As originally enacted, however, section 190 of the Act of 1992 contained the following further provision:

"(3) Any payment made to an employee by an employer in respect of a period falling within a protected period—

(a) under the employee's contract of employment, or

(b) by way of damages for breach of that contract,

shall go towards discharging the employer's liability to pay remuneration under the protective award in respect of that first mentioned period.

Conversely any payment of remuneration under a protective award in respect of any period shall go towards discharging any liability of the employer under, or in respect of any breach of, the contract of employment in respect of that period."


We shall refer later to the circumstances in which section 190(3) was repealed by the Trade Union Reform and Employment Rights Act 1993 as from 30 August 1993.


Sections 188 to 190 of the Act of 1992 were substituted for comparable provisions in the Employment Protection Act 1975. The provisions in the Act of 1975 were introduced in order to comply with EC Directive No. 75/129 of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies. Article 2 of Directive 75/129 in its original form included these paragraphs:

"1. Where an employer is contemplating collective redundancies, he shall begin consultations with the workers' representatives with a view to reaching an agreement.

2. These consultations shall, at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and mitigating the consequences."


The second group of legislation is that concerned with providing some protection to an employee whose rights to arrears of wages or other payments may be rendered ineffective by the insolvency of his employer. In order to deal with this problem both EC legislation and UK legislation have made provision for an employee to have a right of recourse to a third party in the event that his employer is insolvent.


The relevant EC legislation is contained in Directive No. 80/987 of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer.


By Article 1 of the Directive it is provided that the Directive should apply to employees' claims arising from contracts of employment or employment relationships and existing against employers who are in a state of insolvency within the meaning of Article 2(1). Section II of the Directive contains provisions concerning guarantee institutions. Article 3 provides:

"1. Member States shall take the measures necessary to ensure that guarantee institutions guarantee, subject to Article 4, payment of employees' outstanding claims resulting from contracts of employment or employment relationships and relating to pay for the period prior to a given date.

2. At the choice of the Member States, the date referred to in paragraph 1 shall be:

- either that of the onset of the employer's insolvency;

- or that of the notice of dismissal issued to the employee concerned on account of the employer's insolvency;

- or that of the onset of the employer's insolvency or that on which the contract of employment or the employment relationship with the employee concerned was discontinued on account of the employer's insolvency."


It will be seen that the obligation to provide a guarantee under Article 3 is subject to Article 4. Article 4 of the Directive entitles Member States to limit the liability of guarantee institutions to the extent specified in the Article. Article 4 so far as is material is in these terms:

1. "Member States shall have the option to limit the liability of guarantee institutions, referred to in Article 3.

2. When Member States exercise the option referred to in paragraph 1, they shall:


- in the case referred to in Article 3(2), third indent, ensure that payment of outstanding claims relating to pay for the last 18 months of the contract of employment or employment relationship preceding the date of the onset of the employer's insolvency or the date on which the contract of employment or the employment relationship with the employee was discontinued on account of the employer's insolvency. In this case, Member States may limit the liability to make payment to pay corresponding to a period of 8 weeks or to several shorter periods totalling 8 weeks.

3. However, in order to avoid the payment of sums going beyond the social objective of this Directive, Member States may set a ceiling to the liability for employees' outstanding claims.

When Member States exercise this option, they shall inform the Commission of the method used to set the...

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2 books & journal articles
  • Mann v Secretary of State for Employment
    • United Kingdom
    • Wiley The Modern Law Review No. 63-6, November 2000
    • 1 November 2000
    ...cause difficulties foremployees without expert legal advice, see Secretary of State for Trade and Industry v Walden [2000]IRLR 168.32 [1997] IRLR 21.33 But note that this does not allow Member States to define pay in a manner which is more restrictivethan the definition accepted generally i......
  • United Kingdom
    • European Union
    • Study on the enforcement of State aid law at national level Part I. Application of EC State aid rules by national courts.
    • 1 January 2006
    ...4199. [378] Case 188/92, TWD v Bundesrepublik Deutschland [1994] ECR I-833. [379] [1991] A.C. 603. [380] Judgment of 30 September 1996, [1997] ICR 209. [381] [1996] 1 CMLR 889. [382] See, for instance, Case C-308/01, GIL Insurance Ltd and Others v Commissioners of Customs & Excise [2004......

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