At all relevant times a renovation project was being undertaken at a construction site.  The client was Scottish & Southern Energy Ltd; the managing contractor for the electrical installation work on the site was Alstom Ltd. Alstom sub-contracted the electrical installation work to Lindhurst Engineering Ltd. Lindhurst had insufficient staff to operate that sub-contract and entered into an agreement with the respondent for the supply of workers on site under a labouronly sub-contract.  Under that arrangement workers were employed directly by the respondent to work for Lindhurst on electrical work on site, and the respondent raised fee notes in respect of the labour supplied for payment by Lindhurst. The claimant was offered a job by the site manager, who was not directly employed by any of the relevant contractors. That job offer was later withdrawn because, according to the respondent, they did not need as many operatives and the claimant was the last person to have been offered employment. A few weeks later, the claimant was offered employment at the site by the respondent's group industrial relations manager which he accepted. He was made redundant a few months later on the basis of LIFO. The claimant brought 2 claims to the ET; the first was that he had had the offer of employment withdrawn, not because he was not needed, but because he was a union activist. The second was that he had been unfairly dismissed because, if he had started employment when it was first offered, he would not have been the last person to be employed and therefore according to LIFO he would not have been made redundant. He won his first claim but lost the second. The claimant and respondent appealed against both rulings.

The EAT upheld both decisions. First they rejected the argument that the site manager was not acting as an agent for the respondent when he withdrew the earlier offer of employment on trade union grounds. He was. On the redundancy issue, the ET were entitled to hold that it was not right to apply a simple "but for" test: but for the original act the claimant would have been retained under LIFO.  That did not answer the "reason why" question: why was the claimant dismissed?  The Tribunal found it was by application of the LIFO principle. The EAT were satisfied that the Tribunal were entitled, as a matter of law, to take that approach.

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Appeal No. UKEAT/0268/11/CEA

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

At the Tribunal

On 14 June 2012

Before

HIS HONOUR JUDGE PETER CLARK, MR J MALLENDER, DR K MOHANTY JP

BEAVER MANAGEMENT SERVICES LTD (APPELLANT)

MR S ACHESON (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant
MR H MENON (of Counsel)

Instructed by:
Messrs Smith & Graham Solicitors
Church Square Chambers
Hartlepool
TS24 7HE

For the Respondent
MR N TOMS (of Counsel)

Instructed by:
Messrs Walker Smith Way Solicitors
26 Nicholas Street
Chester
CH1 2PQ

TRADE UNION RIGHTS

Action short of dismissal

Dismissal

Whether site manager acting as agent for Respondent before Employment Tribunal when he withdrew an earlier offer of employment on trade union grounds. He was. Employer appeal dismissed.

Whether after Claimant was subsequently employed his dismissal for redundancy was automatically unfair. ET entitled to hold it was not. Claimant's cross appeal dismissed.

1. We have before us for full hearing an appeal by the Respondent before the Manchester Employment Tribunal, Beaver Management Services Ltd, and a cross appeal by the Claimant, Steven Acheson, against the Judgment of a Tribunal chaired by Employment Judge Russell dated 21 October 2010. Written Reasons for that Judgment were promulgated on 11 November.

1. At all relevant times a renovation project was being undertaken at the Fiddlers Ferry Power Station ("the site"). The client was Scottish & Southern Energy Ltd; the managing contractor for the electrical installation work on the site was Alstom Ltd ("Alstom"). Alstom sub-contracted the electrical installation work to Lindhurst Engineering Ltd ("Lindhurst"). Lindhurst had insufficient staff to operate that sub-contract and entered into an agreement with the Respondent for the supply of workers on site under a labour only sub-contract. Under that arrangement workers were employed directly by the Respondent to work for Lindhurst on electrical work on site, and the Respondent raised fee notes in respect of the labour supplied for payment by Lindhurst.

1. The Claimant was an experienced electrician who had worked in the industry for some 40 years; he was also a well known trade union activist. The site manager was a Mr Ambrose. He was not directly employed by any of the relevant contractors. His services were provided to the Respondent through his company, J Ambrose E and I Services Ltd ("E and I"). E and I invoiced the Respondent for his services; the Respondent paid those invoices and passed on the costs by invoicing Lindhurst.

1. The Claimant initially applied to Lindhurst for work as an electrician on site. He was informed that Lindhurst was sub-contracting the supply of labour to the Respondent and that his CV would be passed to the Respondent, who would be contacting him. That was in about July 2007. At 8.10am on Friday, 11 July 2008, some 12 months later, the Claimant was contacted by an employee of Lindhurst working in their site office called Stacey. What happened was that Mr Ambrose asked Mr Bate, a shop steward on site, to assist in telephoning electricians to offer them employment with the Respondent on site from 14 July. Mr Bate identified the Claimant as one of the first to be telephoned, leaving the contact to be made by Stacey. They worked from a list of names and contact details. The Claimant was informed that his application made 12 months earlier was successful, that he would be starting work on 14 July 2008, and that the contract would be for at least 3 months; he accepted that offer.

1. At about 11.50am the same morning, 11 July, Mr Ambrose telephoned the Claimant. He explained that he was the site manager and that the job offered to him earlier in the day was withdrawn. The story that Mr Ambrose gave him on that occasion was that if the Claimant was employed on site, that would take the number of operatives to 20 and he would have to employ a safety officer. He said that he would have to withdraw the offer of employment to the Claimant because he was the last person to have been offered employment.

1. Mr Ambrose was not called to give evidence before the Tribunal, and the Tribunal agreed with the Claimant that that was not a truthful explanation for the withdrawal of his employment; indeed, the Tribunal described it as a "fanciful" explanation. Mr Bate did give evidence; his account was accepted by the Tribunal. He said that Mr Ambrose gave him a different explanation for the withdrawal of the offer of employment to the Claimant. He told Mr Bate that the Claimant was one of the ten top union activists in the country. He added that there had been an oversight, and that the four men who had been telephoned last would have to be contacted and told that their job offers had been withdrawn. Mr Bate pointed out that the Claimant had been one of the first to be contacted. Mr Ambrose wrote to the Claimant on the same day, 11 July, stating that the proposed night shift had had its numbers reduced; he was therefore, with regret, no longer required. The Tribunal accepted that the number of workers required was reduced from 20 to 15 by Alstom; however, they did not accept that the Claimant was one of the 5 people contacted last.

1. It later emerged, in March 2009, that, as a result of a raid on the offices of the Consultancy Association by staff of the Information Commissioner the Claimant's name was on a blacklist of trade union activists, although the Respondent was not a member of that association. The Claimant did not, as a result of Mr Ambrose's withdrawal of employment, start work on 14 July. There was a threat of industrial action on the site, which did not in the event take place, and Mr Derek Simpson, then joint General Secretary of the Unite union, to which the Claimant belonged, lobbied on his behalf.

1. On 14 August 2008 the Claimant was offered employment at the site by Mr Simms, the Respondent's group industrial relations manager. He accepted and immediately started work. He was then involved in trade union activities on the site, but that caused no concern to the Respondent, so the Tribunal found.

1. On 11 December 2008 at a meeting of the PJC it was agreed that future redundancies would be determined on the basis of LIFO, itself based on length of service on the site. On 18 December 2008, after Alstom had made clear its labour requirements for the site, it was apparent that redundancies were necessary; in particular, only four grade 6 workers were required. There were six, including the Claimant, on site. Applying the LIFO principle the Claimant and a Mr Smyth had the least service on site and were selected for redundancy. However, two of those retained, Messrs Rigby and Littler, had commenced employment on the site on 15 July 2008. Thus, had the Claimant been started on 14 July pursuant to the initial offer, which he accepted on 11 July, he would not have been selected for redundancy; he would have had one day's more service than those two colleagues.

1. The Claimant advanced two separate claims, both resisted by the Respondent:

(1) He complained that, contrary to section 137(1)(a) of the Trade Union and Labour Relations (Consolidation) Act 1992 ("the 1992 Act") he was refused employment in July 2008 because he was a member of a trade union. The Tribunal noted (Reasons, paragraph 6) that by section 137(5)(e) a person is refused employment where an offer of employment is made but then withdrawn, and that where the refusal (here withdrawal) is because the person is a trade union activist, that is on trade union membership grounds and section 137(1)(a) is breached. On the facts found the Tribunal concluded that the real reason for Mr Ambrose's withdrawal of the offer of employment accepted by the Claimant was that he was a trade union activist and that his action was as agent for the Respondent, thus fixing the Respondent with liability under section 137(1)(a) (Reasons, paragraph 7). In challenging that finding in the appeal the question is whether, as a matter of law, the Tribunal was entitled to find that Mr Ambrose acted as agent for the Respondent ("the agency issue").

(2) Further, the Claimant contended that his dismissal in December 2008 was automatically unfair for the purposes of Part X of the Employment Rights Act 1996 ("the 1996 Act") by virtue of sections 152 and/or 153 of the 1992 Act. Section 152(1) renders a dismissal automatically unfair where the reason or principal reason for dismissal was that the Claimant was a member of an independent trade union. Section 153 provides that where the principal reason for dismissal was that he was redundant and the redundancy applied equally to one or more other employees in the same undertaking holding similar positions to the Claimant who had not been dismissed, and the reason or principal reason he was selected for dismissal was one of those specified in section 152(1), a trade union reason, the dismissal shall also be regarded as automatically unfair for the purposes of Part X of the 1996 Act. On this aspect of the case the Tribunal concluded that his dismissal by the Respondent in December 2008 was not for a trade union reason under section 152(1); the reason was redundancy, and he was selected under the agreed LIFO principle. They further rejected an argument advanced on behalf of the Claimant (see paragraph 11) that if, as they did, they found for the Claimant on the first claim, then he must also succeed on the second claim, since, had his offer of employment on 11 July not been withdrawn because of his trade union membership, including his history as a trade union activist, he would have commenced work on the site on 14 July, so that one of the two men who started on 15 July would have been selected in his stead. It is against the Tribunal's finding that the Claimant was not dismissed on trade union grounds ("the reason issue") that he brings his cross appeal.

1. Before addressing what seems to us to be the real point in the Respondent's appeal, we should deal first with the separate argument that Mr Menon sought to raise, namely that no offer of employment was made to the Claimant on 11 July by or on behalf of the Respondent. Rather, he submits, the offer was made by Stacey, an employee of Lindhurst. We reject that contention. It is absolutely plain to us from the Tribunal's findings of fact, particularly at paragraphs 4.2 and 4.3, that Mr Ambrose needed to recruit electricians to be employed by the Respondent and supplied to Lindhurst. For this purpose he enlisted the assistance of Mr Bate to contact likely candidates, and Mr Bate in turn passed the mechanical task of contacting those candidates by telephone to Stacey. In the event, the Respondent accepted ultimately 15 electricians into their employment who had been recruited in this way. As part of that process the Claimant was offered, and accepted, employment with the Respondent.

1. The real question is whether Mr Ambrose had authority to act as the Respondent's agent for the purposes of recruiting electricians. Despite Mr Menon's best efforts to argue the contrary, we entirely agree with Mr Toms that the Tribunal found, and was entitled to find (Reasons, paragraph 7), that Mr Ambrose, the site manager, was given a wide discretion by the Respondent as to who should be appointed and not appointed from the list of electricians that was generated but in the event not produced in evidence. At the very least, Mr Ambrose had ostensible authority to recruit electricians and indeed delete them from the strength when the client's requirements changed from 20 to 15 electricians. Plainly, he had authority to withdraw the offer made to the Claimant, and the Respondent never suggested otherwise during the period July to December 2008. In these circumstances, the old case of Marsh v Joseph [1897] 1 Ch 213 CA, to which Mr Menon referred us although not the Employment Tribunal, is distinguishable; there, there was no pretence of any a priori authority. In the present case before the ET the Respondent's case was not that Ambrose had no authority but that he had exceeded his authority. Its factual case was rejected by the Tribunal; thus, under ordinary principles of agency, the Respondent was fixed with the consequences of Mr Ambrose's unlawful motivation for withdrawing the offer to the Claimant even although the Respondent was unaware at the time of that motivation.

1. In these circumstances, we reject the Respondent's challenge to the Tribunal's finding that Mr Ambrose acted as the Respondent's agent; he did so on its behalf, not that of Lindhurst, in connection with the employment of the Claimant and other electricians, and the withdrawal of employment, under a contract of service made with the Respondent.

1. The way in which the Claimant's case on automatically unfair dismissal is put is superficially attractive. The facts are that he was dismissed by reason of redundancy in December 2008. He was selected for redundancy on the basis of LIFO on site by grade having less service than two relevant colleagues. Had he started on site on 14 July as originally agreed, he would have been retained as having one day's more service than those two colleagues. The reason why he did not start on 14 July was due to the unlawful act of Mr Ambrose, for which the Respondent was also liable, in withdrawing the offer of employment on trade union grounds. Therefore, the reason for dismissal was his trade union membership.

1. The Tribunal rejected that process of reasoning. They held (paragraph 11) that it was not right to apply a simple "but for" test: but for the original act the Claimant would have been retained under LIFO in December 2008. That did not answer the "reason why" question: why was the Claimant dismissed in December? The Tribunal found it was by application of the LIFO principle. We are satisfied that the Tribunal were entitled, as a matter of law, to take that approach. Support for such an approach may be found in CGB Publishing v Killey [1993] IRLR 520 EAT, which in turn is, we think, consistent with the analysis provided by Underhill J, then President, in Amnesty International v Ahmed [2009] IRLR 884, reconciling the House of Lords cases of James v Eastleigh Borough Council [1990] IRLR 288 and Nagarajan v London Regional Transport [1999] IRLR 572. In the analogous type of discrimination case the "but for" test is appropriate where the treatment complained of is inherent in the act itself, as in James. However, where the protected feature is a part of the circumstances in which the treatment complained of occurred, it does not necessarily follow that the unlawful protected feature formed part of, here, the reason for dismissal. A good example on its facts is to be found in Seide v Gillette [1980] IRLR 427, referred to by the then President at paragraph 37 in Ahmed.

1. We are further fortified in our conclusion that this Tribunal was entitled to find that the dismissal in December 2008 was not automatically unfair under sections 152 and/or 153 of the 1992 Act by a helpful point made by Mr Menon. If, as is the case, the first complaint is upheld, then in assessing compensation for any loss flowing from Mr Ambrose's withdrawal of employment in July it is open to the Claimant to argue, the point not being conceded on behalf of the Respondent, that such loss includes the loss of employment in December due to the operation of LIFO, in which the Claimant was disadvantaged by not having started his employment on 14 July.

1. For these reasons, both the appeal and cross appeal fail and are dismissed.