City Link Redundancies: An Unfair Dismissal?

The RMT Union has today reported on discussions it held today with the administrators of City Link, which on Christmas Day announced the redundancy of over 2,500 jobs with workers losing their jobs on New Years Eve, The union reports that at the meeting the union was told that:

* the company were working with insolvency advisors since November without telling the staff or their union.
* the company was technically declared insolvent on the 22nd December but deliberately withheld that information.  A plot to hold the announcement to Boxing Day was only thwarted by the RMT acting on information from a whistle blower.
* more than 2000 staff will be made redundant on New Years eve. City Link and it’s financial backers will have no liability for redundancy payments and the staff will have to apply to the government scheme. The remaining staff will be retained short term to wind down the company.
* individual sub contractors, owed thousands of pounds, are unlikely to see any of their money.
* there is no one in the frame to take over the company as a going concern but there may be a limited number of jobs available at other companies.
A dismissal by reason of redundancy is a potentially fair reason for dismissal. However, assuming the summary is accurate this raises the prospect that the redundant employees, or rather, those redundant workers with two or more years service may have a unfair dismissal claim. There appear to be two grounds upon which such a claim could be made.
i) Failure to inform
In Williams v Compair Maxam Ltd [1982] ICR 156 the EAT set out five guidelines for a large company should follow to ensure a ‘fair’ dismissal:
In law therefore the question we have to decide is whether a reasonable tribunal could have reached the conclusion that the dismissal of the applicants in this case lay within the range of conduct which a reasonable employer could have adopted. It is accordingly necessary to try to set down in very general terms what a properly instructed industrial tribunal would know to be the principles which, in current industrial practice, a reasonable employer would be expected to adopt. This is not a matter on which the chairman of this appeal tribunal feels that he can contribute much, since it depends on what industrial practices are currently accepted as being normal and proper. The two lay members of this appeal tribunal hold the view that it would be impossible to lay down detailed procedures which all reasonable employers would follow in all circumstances: the fair conduct of dismissals for redundancy must depend on the circumstances of each case. But in their experience, there is a generally accepted view in industrial relations that, in cases where the employees are represented by an independent union recognised by the employer, reasonable employers will seek to act in accordance with the following principles:

1. The employer will seek to give as much warning as possible of impending redundancies so as to enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider possible alternative solutions and, _f necessary, find alternative employment in the undertaking or elsewhere.

2. The employer will consult the union as to the best means by which the desired management result can be achieved fairly and with as little hardship to the employees as possible. In particular, the employer will seek to agree with the union the criteria to be applied in selecting the employees to be made redundant. When a selection has been made, the employer will consider with the union whether the selection has been made in accordance with those criteria.

2. Whether or not an agreement as to the criteria to be adopted has been agreed with the union, the employer will seek to establish criteria for selection which so far as possible do not depend solely upon the opinion of the person making the selection but can be objectively checked against such things as attendance record, efficiency at the job, experience, or length of service.

4. The employer will seek to ensure that the selection is made fairly in accordance with these criteria and will consider any representations the union may make as to such selection.

5. The employer will seek to see whether instead of dismissing an employee he could offer him alternative employment.

The lay members stress that not all these factors are present in every case since circumstances may prevent one or more of them being given effect to. But the lay members would expect these principles to be departed from only where some good reason is shown to justify such departure. The basic approach is that, in the unfortunate circumstances that necessarily attend redundancies, as much as is reasonably possible should be done to mitigate the impact on the work force and to satisfy them that the selection has been made fairly and not on the basis of personal whim.

As the tribunal indicated such an approach is not a ‘checklist’ which leads to a finding of unfair dismissal if not followed, as later affirmed by the EAT in A Simpson and Son (Motors) v Reid [1983] IRLR 401.

Still, according to the Daily Record the Venture capitalist and UKIP supporter Jon Moulton who ran City Link had admitted to the Sunday Mail that he had not informed the employees as soon as the decision to dismiss them had been made. Moulton is reported to have told them “The intent was to announce on Boxing Day. The appointment could ­conveniently be made on Christmas Eve”. In other words, the decision had been made on a working day (Christmas Eve) but deferred to a non working day. That would arguably come within the advise that a reasonable employer would give as “much warning as possible of impending redundancies so as to enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider possible alternative solutions and, if necessary, find alternative employment in the undertaking or elsewhere.”

ii) Lack of Consultation

According to the RMT release City Link “were working with insolvency advisors since November without telling the staff or their union.” Given Moulton’s comments on the Union “irritating him to death” together with other attributed views the idea seems credible.

Although a breach of section 188 of the Trade Union and Labour Relations Act 1992 will not necessarily render a dismissal unfair a failure to consult will normally render a dismissal unfair (Mugford v Midland Bank plc [1997] UKEAT 760_96_2301). Section 188 requires that “Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment … 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.

Section 188 was enacted to implement EU Directive 98/59 which makes cleared the consultation is required at that time the redundancies are ‘contemplated’ rather than the ‘proposed’ set out in the 1992 Act. It seems to me that it is likely that at redundancies were contemplated at least as early as the November meetings with insolvency advisers and, most likely, significantly before then. The employer failed to do that. In so doing it it would appear that City Link are likely to have failed to give employees the opportunity to express their views which in Rowell v Hubbard Group Services [1995] UKEAT 44_94_1201 was found to have rendered a dismissal unfair, a case relied upon in subsequent claims.

In order to defend such a claim the Respondent would need to show that consultation would have been useless (Duffy v Yeomans and Partners Ltd [1994] CA). That is clearly a fact sensitive question but given the likelihood that voluntary redundancies could have been agreed, other redundancy mitigation strategies suggested, or even a government intervention or mutualisation it is difficult to see how consultation would have been ‘useless’ even if, as seems likely, the prospects of an agreement were not high.

And, of course, any claimant may want to consider adding named individuals as additional respondents in any claim. I understand RMT are a recognised union in City Link and, I am sure, will be also be pursuing a protective award of 90 days pay per union member in this case as well as well as advising on pursuing claims against an insolvent employer (of all the union’s RMT is the one for whom I have the utmost respect regarding its legal work).

Whatever happens, it is a terrible situation and what makes it worse is that while hundreds of former employees will face enormous difficulties making ends meet the likes of Jon Moulton will soon brush this off and go on to makes many more hundreds of thousands of personal wealth whilst leaving a trail of destruction behind him.

 

 

 

 

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