Graff Diamonds Ltd v Boatwright UKEAT/0148/10/RN
Appeal against a ruling that the respondent had failed to comply with the requirements of TULRA and thus was liable to pay a protective award of 30 days to the claimant. Appeal by the claimant against the amount of the protective award. Both appeals allowed and remitted to the same Tribunal for a re-hearing.
The respondent wanted to make some employees redundant, but being aware of the TULRA requirements, decided to limit the number of redundancies to 19. The claimant was one of those made redundant. Just after the redundancies were concluded, another long standing employee left the respondent’s employment, supposedly having taken early retirement, a compromise agreement having been reached with the respondent. The claimant claimed that the respondent actually proposed to dismiss 20 employees and that this 20th employee had also been made redundant, which meant that TULRA was applicable. The respondent had failed to comply with the requirements of TULRA and therefore the claimant was entitled to a protective award. The Tribunal agreed, saying that it was clear to them that the 20th employee had volunteered for redundancy before the dismissals were concluded. They based their decision on the fact that there was no financial benefit to the employee if he retired because he did not have a pension, but he would have gained quite considerably if he had taken voluntary redundancy. They held that the respondent deliberately delayed and labelled his leaving party as a ‘retirement party’ in order to avoid having to comply with the requirements of TULRA.
At the EAT, the respondent complained that the Tribunal’s findings were perverse, alternatively that they were insufficiently reasoned. They submitted that the Tribunal was illogical in holding that it followed, because the 20th employee had volunteered to be dismissed and be given payment, he was necessarily a volunteer for redundancy; given his age he could equally have been a volunteer for early retirement. The EAT rejected the argument that the Tribunal’s conclusion was perverse but did say that they were not confident that they understood the basis for the conclusion. They asked that the respondent provide proper disclosure, in particular details of the compromise agreement, at the re-hearing. The EAT also criticised the reasoning for the 30 day protective award; the Tribunal should not have linked this with the length of the minimum period of consultation.
Appeal No. UKEAT/0148/10/RN
EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
At the Tribunal
On 4 February 2011
HIS HONOUR JUDGE RICHARDSON
SIR ALISTAIR GRAHAM KBE
MS P TATLOW
GRAFF DIAMONDS LTD (APPELLANT)
MR M J BOATWRIGHT (RESPONDENT)
Transcript of Proceedings
For the Appellant
MR T WALKER (of Counsel)
Messrs Howard Kennedy Solicitors
19 Cavendish Square
For the Respondent
MR M EGAN (of Counsel)
Messrs Philip Ross & Co Solicitors
4 Chandos Street
Collective consultation and information
Section 188(1) TULRA – the Respondent accepted that it proposed to dismiss as redundant 19 employees, but said that a 20th employee’s employment was consensually terminated for early retirement. Tribunal found otherwise - reasoning insufficient on this point.
Section 189 TULRA – approach to protective award. Tribunal wrongly linked protective award to consultation period and failed to apply approach in Susie Radin Ltd v GMB  ICR 893, especially at paragraph 45 and Hutchins v Permacell Finesse Ltd (2007) UKEAT/0350/07, especially at paragraphs 20-21.**HIS HONOUR JUDGE RICHARDSON**
- By a judgment dated 23 December 2009 the Employment Tribunal sitting in Central London (Employment Judge Grewal presiding) held that Graff Diamonds Ltd (“the Respondent”) failed to comply with the requirements of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRA”) and made a protective award of 30 days’ pay in favour of Mr Mark Boatwright (“the Claimant”). This was one of a number of issues which the Employment Tribunal had to resolve in the course of dealing with claims by the Claimant and another employee against the Respondent.
- Both the Claimant and the Respondent have appealed against this part of the judgment. Logically the Respondent’s appeal should be dealt with first, because the Respondent says it was not in breach of section 188 of TULRA at all. We will then turn to the Claimant’s appeal, which concerns the amount of the protective award.
- The background to this appeal may be summarised quite shortly. The Respondent is a manufacturer and retailer of high quality handmade jewellery. It had an establishment in Albermarle Street where there was a factory and offices for administrative staff. In November 2008 due to adverse trading conditions it proposed to make redundancies among its 117 staff. Having sought legal advice it deliberately proposed to make no more than 19 persons redundant so as to avoid the more onerous collective consultation requirements which are applicable if an employer proposes to make 20 or more persons redundant in one establishment within 90 days.
- The collective consultation requirements are contained in sections 188-192 of TULRA. By section 188(1):
“(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 affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.”
- In Optare Group Ltd v TGWU  IRLR 931 the employers sought volunteers for redundancy and also made compulsory redundancies. In all it accepted three 3 volunteers and made 17 employees redundant. It was held that the volunteers were also dismissed for redundancy, making a total of 20. The Tribunal had this decision in mind: see paragraph 4 of its reasons.
- There is no dispute that the Respondent proposed to dismiss 19 employees as redundant. Consultation started on 4 November 2008. For the most part it concluded by 17 November, although in the Claimant’s case consultation was extended and he was not finally notified of his dismissal for redundancy until 20 November 2008.
- It was the Claimant’s case that the Respondent proposed to dismiss 20 employees. He relied on the fact that on 28 November 2008 Mr McLory, a long serving production manager, also left the Respondent’s employment. He said that Mr McLory too was made redundant.
- In his witness statement for the Tribunal hearing the Claimant said he believed that Mr McLory had been forced out; but there was no mention of Mr McLory in the witness statement of Mr Nicholas Paine, the chief financial officer called by the Respondent who was responsible for the decision-making process. Nor did the Respondent disclose any documents relating to the termination of Mr McLory’s employment, except for some photographs of what was said to be a retirement party.
- During the Tribunal hearing (which, as we have said, was concerned with a number of issues) the Claimant and Mr Paine both gave evidence. Both were cross-examined. The Claimant asserted his belief that Mr McLory was made redundant. Mr Paine, under cross-examination, gave his evidence about Mr McLory. He said that Mr McLory had asked the Respondent to consider early retirement and asked what arrangement it would make; that a retirement package had been put together for him by agreement; and that the package had been the subject of a compromise agreement (which he declined to reveal). He said that Mr McLory had not been among those put at risk of redundancy; but he also accepted that Mr McLory had not been replaced. He said that Mr McLory had been unhappy at the beginning of November, but that the first discussion about early retirement with a package was after 20 November, when the round of redundancy dismissals concluded. It was put to him squarely that he was not telling the truth; he maintained his position.
- The Tribunal’s findings were the following:
“19. Mr McLory had been unhappy for some time at work and also had personal issues as a result of which he wished to spend more time with his family. Having attended the meeting on 4 November, he approached Mr Graff about leaving. His position had not been identified as being potentially redundant, but it was clear to the Respondent that with the reduction in demand and production and the recent promotion of Mr Davies that Mr McLory would not need to be replaced. The Respondent’s case is that nobody volunteered for redundancy, but we find that Mr McLory did. He wanted to leave and if he was made redundant because of his length of service he would receive quite a generous package. The Respondent had no pension or retirement compensation scheme and he would not be entitled to anything if he retired. He, therefore, volunteered for redundancy. In order to avoid collective consultation and make the maximum number of employees redundant, Mr McLory’s termination was dealt with following the conclusion of the redundancy exercise and was labelled a retirement.
38. The redundancy process concluded on 20 November 2008. Mr Boatwright was the last person to be dismissed for redundancy. The Respondent’s case was that on 24 November (the Monday) Mr McLory approached Mr Paine and sought early retirement. It is not entirely clear to us what early retirement means in this context. The Respondent did not have a pension or retirement compensation scheme that would lead to Mr McLory receiving any financial benefit. If he left or ‘retired’ it would be at the Respondent’s discretion if it chose to pay him anything at all. He had no entitlement to anything. On Friday 28 November 2008 his employment was terminated. He received a remuneration package and signed a compromise agreement. The Respondent’s case was that there was no dismissal but termination by mutual consent. Mr McLory was not replaced.
39. It is clear to us that Mr McLory volunteered for redundancy after the meeting on 4 November 2008, and that it was agreed that he would be paid a termination package if he felt [sic]. However, the termination of his employment was put off until the conclusion of the redundancy process to try and separate it from that and it was labelled an early retirement. However, it is clear to us that whatever label is put on it, Mr McLory was someone who had volunteered in the course of the redundancy process to be dismissed and to be given a payment. In other words he was a volunteer for redundancy and was accepted as such. As he was a very long serving employee the Respondent held a retirement party for him and gave him a present.
40. It was in Mr McLory’s interest economically to volunteer for redundancy rather than to seek to retire early. The former guaranteed him a financial package (comprising statutory redundancy pay and pay in lieu of notice), the latter did not. In those circumstances and for the reasons set out in paragraphs 19 and 39 (above), we are satisfied that Mr McLory volunteered to be dismissed for redundancy and that his termination was a direct result of his doing so. The fact that the Respondent held a party for him does not alter that fact. It was delayed and labelled otherwise in order to avoid having to comply with the requirements of section 188.
41. It is, therefore, our conclusion that from the time that Mr McLory volunteered for redundancy in early November, the Respondent was proposing to dismiss 20 employees for redundancy, and the requirement to consult employee representatives applied. The Respondent failed to comply with that requirement. As the minimum period for consultation for the dismissal of less than 100 employees is 30 days, we decided to make an award for one month’s wages.”
- On behalf of the Respondent, Mr Walker submits that the conclusions of the Tribunal were either perverse or insufficiently reasoned. He submits that the Tribunal’s conclusion appears to require findings by the Tribunal that Mr Paine deliberately manipulated Mr McLory’s dismissal so that it fell after the consultation exercise had finished and also that his evidence was perjured as to (1) the date when Mr McLory approached him, (2) the circumstances in which Mr McLory approached him, (3) what Mr McLory said to him and (4) the reason for Mr McLory’s dismissal. He submits that such findings were perverse. Alternatively, he submitted that the findings were insufficiently reasoned: the Respondent – and in particular Mr Paine – was entitled to know why his evidence was rejected on this point when it was accepted on others. He submitted that in paragraph 39 of the reasons the Tribunal was illogical in holding that it followed that because Mr McLory had volunteered in the course of the redundancy process to be dismissed and to be given payment, he was necessarily a volunteer for redundancy. Given his age, he could equally have been a volunteer for early retirement.
- On behalf of the Claimant, Mr Egan submits that the conclusions of the Tribunal were open to it, contained no error of law and were sufficiently reasoned. He accepted that where there is a conflict of evidence on a significant issue of fact the Tribunal must make clear its finding on that issue so that its conclusion can be readily ascertained from a reading of the decision. He further accepted that, in drawing inferences from the evidence, a tribunal should either make express findings on the primary facts or indicate which witnesses it believed. He submitted that the Tribunal satisfied these requirements in its reasoning. He said it was plain from paragraph 19 of the reasons and again from paragraphs 39-41 that the Tribunal must have rejected the evidence of Mr Paine.
- Both counsel referred us to well-known authorities on the tests to be applied when deciding whether a Tribunal’s conclusions were perverse or insufficiently reasoned; in particular Yeboah v Crofton (2002) IRLR 634, Meek v City of Birmingham District Council  IRLR 250 and English v Emery Reimbold & Strick Ltd (2003) IRLR 710.
- As we turn to our conclusions, we must say we have considerable sympathy for the Tribunal’s position. Mr Paine’s witness statement had not dealt with the issue. The Respondent had not disclosed a single document (other than photographs) concerning Mr McLory. Nevertheless the Respondent’s case was eventually articulated in the evidence of Mr Paine, and the Tribunal was required to consider it.
- We certainly reject the argument that the Tribunal’s conclusion was perverse. There was in our judgment material on which the Tribunal could reach the conclusion it reached; it was not bound to accept Mr Paine as a truthful witness, and if it did not it was entitled to draw conclusions adverse to the Respondent both from the primary facts and from the unsatisfactory evidence (if such it was) of Mr Paine.
- The difficulty for us is to see from the reasoning of the Tribunal whether and if so to what extent this is the course it took. Three features of the Tribunal’s reasoning call for comment.
- Firstly, the Tribunal, having noted that Mr McLory had volunteered in the course of a redundancy process to be dismissed and was given a payment, equated that with being a volunteer for redundancy and being accepted as such. This does not necessarily follow. It is not inconceivable that an employee close to retirement might say “I am willing to retire early – offer me a package and I will do so”; and that an employer who was not proposing to dismiss him for redundancy might allow a consensual early retirement. So it was important that the Tribunal should decide whether it accepted or rejected what Mr Paine said.
- Secondly, the Tribunal does not expressly say whether and if so to what extent it accepted Mr Paine as an honest witness in respect of the evidence he gave. It is plain from its judgment as a whole that it did not generally reject his evidence. It may have done on this issue, at least in part; but it does not say to what extent or why.
- Thirdly, the Tribunal does not deal with – either to accept or to reject – the Claimant’s case that the prime mover in Mr McLory’s dismissal was the Respondent; in effect that Mr McLory was forced out.
- In the result, we are not confident that we have understood the basis for the Tribunal’s conclusion. We think the correct course is to remit the issue to the same Tribunal, if available. It should re-consider this issue. For the purpose of doing so it should be prepared to receive further documents; we think the Respondent should provide proper disclosure of documents relating to Mr McLory in the run up to his dismissal, and we record the agreement of counsel that the compromise agreement is an admissible document. It should also be prepared to receive further evidence, limited to the issue whether the Respondent was proposing to dismiss Mr McLory for redundancy. In its decision it should make clear what evidence it accepted; why it accepted it; what evidence it rejected; why it rejected it; and what inferences it drew.
- We can deal with this briefly. We repeat the last sentence of paragraph 41 of the reasons.
“As the minimum period for consultation for the dismissal of less than 100 employees is 30 days, we decided to make an award for one month’s wages.”
- This is the wrong approach. It is not correct to make a linkage between the length of the minimum period for consultation and the length of the protective award. For the correct approach, see Susie Radin Ltd v GMB  ICR 893, especially at paragraph 45 and Hutchins v Permacell Finesse Ltd (2007) UKEAT/0350/07, especially at paragraphs 20-21.
- This matter too is remitted to the same Tribunal for the Tribunal (if the issue still arises) to reconsider the length of the protected award in the light of the principles in Susie Radin.
Published: 01/03/2011 16:58