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Employment Update:
Ishfaq Ahmed
Ishfaq Ahmed was recently asked to report on the cases of Nolan v United States (Court of Appeal redundancy) and Gisda Cyf v Barrett (Supreme Court unfair dismissal case).
The reports were first published by LexisNexis and can be found at
http://lexisweb.co.uk/groups/cases/blog/archive/2010/11/18/nolan-v-united-states-of-america.aspx
http://lexisweb.co.uk/groups/cases/blog/archive/2010/11/18/gisda-cyf-v-barratt.aspx
Nolan v United States of America
Summary
The point referred to the European Court of Justice ("ECJ") for a preliminary ruling by the Court of Appeal ("CA") is of great importance in industrial practice: when does the obligation to consult employee representatives such as trade unions in respect of collective redundancies arise under Directive 98/59/EC (the Collective Redundancies Directive) and under s 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULRCA 1992")? TULRCA 1992 was made to give domestic effect to the Directive. Yet the wording of the Directive and TULRCA 1992 differ. Under the latter, consultation is required when the employer is "proposing" to dismiss as redundant whereas the Directive requires consultation when the employer is "contemplating" collective redundancies. There is also conflicting jurisprudence. The EAT has held in UK Coal Mining Ltd v. National Union of Mineworkers (Northumberland Area) and another [2008] ICR 163 that where closure and dismissals are inextricably interlinked, the duty to consult over the reasons arises. The ECJ has also recently considered the issue in Akavan Erityisalojen Keskusliitto AEK ry v Fujitsu Siemens Computers Oy (C-44/08) (2009) ECR I-8163 ECJ (4th Chamber). However the CA in Nolan did not think that the Fujitsu decision had properly clarified whether the consultation obligation under the Directive arose when the employer was proposing but had not yet made a strategic business or operational decision that would foreseeably or inevitably lead to collective redundancies, or only when that decision had actually been made and he was then proposing consequential redundancies.
The question is important as it determines the extent and timing of the employer's obligations. Thus in this case the decision to close the base was made on 13 March 2006, it was proposed to issue all redundancy notices on about 30 June, with the effective date of termination of all employment contracts being 29 September. However, consultation only started on 5 June. The employees' argument was that the USA should have consulted before taking the operational decision to close the base. Such an obligation could have important consequences in certain circumstances. For example, if employee representatives are consulted earlier then they will be able to have a greater input into the strategic, operational and commercial decisions. This could result in discussion which could perhaps avert some or all of the redundancies that may be required. Employers may however see such earlier consultation as undue interference. Further guidance from the ECJ will hopefully finally settle this crucial question (referred to the ECJ despite the USA not wanting such a referral).
In the meantime, employers may be well advised to begin the consultation at the earlier stage rather than risk having a protective award made against them which for certain employers could be a very large sum (the tribunal here made a protective award in respect of all UK citizens who were civilian employees at the base on 29 June 2006 (when the redundancy notices were issued) and set the protected period at 30 days).
Gisda Cyf v Barratt
Summary
The short point decided by the Supreme Court ("SC") in this case was that where dismissal without notice was communicated to an employee in a letter, the employment contract did not terminate until the employee had actually read the letter or had had a reasonable opportunity of reading it. This was therefore the effective date of termination ("EDT") for the purposes of section 97(1) of the Employment Rights Act 1996 and from which time ran. The decision was a specific application of a broader consideration that an employee was entitled either to be informed or at least to have the reasonable chance of finding out that she had been dismissed before time began to run against her.
The case is an important confirmation of a rule established as long ago as 1980 by the EAT Brown v Southall & Knight [1980] ICR 617) and is an important purposive interpretation of the statutory definition of the EDT in order to provide as much protection to the vulnerable employee as possible. Dismissal is an important part of the statutory protection against unfair dismissal. A complaint cannot be brought if not within 3 months of the notice of dismissal unless time is extended. The SC kept at the forefront that it would be unfair for time to begin to run against an employee in relation to her unfair dismissal complaint until the employee knew - or, at least, had had a reasonable chance to find out - that she had been dismissed, considering that dismissal is a major event and required an individual to make important decisions (e.g. whether to bring a claim). Therefore since the time for bringing a claim was already short, it was reasonable that any further restrictions should not be put on this right. Traditional contractual principles were disregarded as s.97 is a statutory construct which is to be interpreted in its statutory context. It was part of a charter protecting employees' rights and the SC adopted an interpretation that promoted those rights. Thus an employee is given three months, not three months less a day or two, in which to make a complaint.
It is respectfully submitted that as a matter of statutory interpretation the decision is correct. Otherwise, if dismissal was effective on the posting of the letter or the date of the employer's decision or the date of its letter, then any application by the employee for interim relief under section 128 of ERA 1996, which must be made within seven days following the EDT, might completely expire before the employee becomes aware of the need to have recourse to it. As the SC noted, Parliament could not have intended this.
However, there are limits on this purposive interpretation and deliberately ignoring the dismissal letter could prevent an employee from arguing that she had not received the dismissal notice. Employees would therefore be well advised to take action within the usual time period and as early as possible. For employers, they can be certain that an employee was aware of the dismissal by informing the employee in a face-to-face interview that she had been dismissed and by perhaps presenting a letter of dismissal at that interview.
At tribunal, although further issues will arise in some cases as to when an employee had read a letter of dismissal and/or as to the reasons for failing to do so, as the SC pointed out this should in most cases be capable of being contained within a short compass. Inevitably, however, tribunals will have to consider the employee's behaviour to assess whether the employee had had a reasonable opportunity to find out about the dismissal. As the SC made clear the human dimension should not be ignored, including circumstances particular to the employee. Thus here the employee was not to be criticised for wanting to absorb the letter and she was not to be condemned for failing to give instructions that the letter should be opened and read to her during the weekend that she spent with her sister. An assessment of all such considerations will then determine the EDT. No doubt tribunals will also be proactive in ensuring that a proportional amount of time is spent on such issues although their importance to an employee's ultimate claim cannot be underestimated.