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United Kingdom Employment Appeal Tribunal

You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> UK Coal Mining Ltd v National Union of Mineworkers (Northumberland Area) & Anor [2007] UKEAT 0397_06_2709 (27 September 2007)
Cite as: [2007] UKEAT 0397_06_2709, [2008] ICR 163, [2008] IRLR 4

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BAILII case number: [2007] UKEAT 0397_06_2709
Appeal No. UKEAT/0397/06/RN UKEAT/0141/07

             At the Tribunal
             On 27/28 September 2007







Transcript of Proceedings


© Copyright 2007



    For the Appellant MR DAVID READE
    (One of Her Majesty's Counsel)
    Instructed by:
    Messrs Freshfields Bruckhaus Deringer
    65 Fleet Street
    EC4Y 1HS
    For the First Respondent MR SIMON DYER
    (of Counsel)
    Instructed by:
    Messrs Browell Smith & Co
    Pearl Assurance House
    7 New Bridge Street West
    NE1 8AQ
    For the Second Respondent MR SEAMUS SWEENEY
    (of Counsel)
    Instructed by:
    Messrs Watson Burton LLP
    1 St James Gate
    NE99 1YQ.


    Redundancy – Collective consultation and information / Protective award

    The Employment Tribunal made maximum protective awards for failure to consult properly over mass redundancies at the Ellington Colliery in Northumberland. The employers contended that the Tribunal had erred in its approach, which caused it to minimise the extent and nature of the consultation which had occurred. In particular, they contended that it had erred in its approach to special circumstances, and in fixing the appropriate length of the protective award.

    The two trade union respondents contended that the decision should be upheld on the facts, and in a cross appeal further submitted that the Tribunal was wrong to take the view –which they did in the light of binding authority- that there was no obligation to consult over the reason for the closure itself.

    The EAT dismissed the appeal and upheld the cross appeal. Dictum of Glidewell LJ in v British Coal and Secretary of State for Trade and Industry ex parte Vardy [1993] ICR 720, 752 to the effect that there need be no consultation over closure held to be no longer good law in the light of changes to the statutory provisions.



  1. This is an appeal against the decision of the Employment Tribunal sitting at Newcastle Upon Tyne, in which it concluded that the appellants, who were the respondent company before the Employment Tribunal, had failed to comply with their obligations under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 in failing to consult the claimants about proposals to dismiss as redundant more than 100 employees at the Ellington Colliery. They awarded the maximum compensation of 90 days under the protective award.
  2. The appellants concede that there was not full consultation, as required by the legislation, but submit that the Tribunal made various errors of law which have had a significant impact upon the amount of the protective award made. They were represented by Mr Reade QC.
  3. There is a cross-appeal by the two trade unions which is directed at a particular finding of the Tribunal, namely that there was no obligation to consult over the closure of the mine. The unions were represented by Mr Dyer, Ms Jolly and Mr Sweeney. They adopted substantially the same arguments, and we will treat them as a single submission for the purposes of this analysis.
  4. The background

  5. The employers owned the Ellington Colliery in Northumberland. They employed 329 employees. The National Union of Mineworkers (Northumberland Area) ("NUM") was the recognised union in respect of most of the employees. The British Association of Colliery Management ("BACM") was recognised with respect to the managers, deputies and supervisory staff.
  6. Ellington was the last deep mine in the north east coalfield. It is near Ashington and Morpeth in Northumberland. Coal is mined to a distance of some five miles under the North Sea. It has always been known as a wet pit and there has frequently been a need to manage water when working there. Water has not, however, presented a major problem. It has required, for example, that miners have to wear waders on some occasions when working underground.
  7. The Tribunal set out in some detail the history concerning the extraction of coal from the colliery and the procedures which were adopted when seams had been exhausted. They also identified how typically a seam would be worked. It is not necessary to reproduce that information, interesting and informative as it is, in this judgment. The vast majority of coal produced at Ellington was used by the Alcan smelting plant in the nearby town of Lynemouth.
  8. There have, over the years, been concerns about the financial viability of the pit. There was a proposal to close the mine in 1999 but in the event it remained open, albeit with some redundancies. There was a further proposal to make seventy redundancies in December 2003. At the beginning of 2004 the colliery was put into the process of review because it was deemed not to be profitable. There was not sufficient coal to supply the Alcan plant and as a consequence coal had to be purchased elsewhere and transferred to Ellington, where it was washed and prepared before being supplied to Alcan.
  9. During 2004 there were several meetings with the unions which led to fifty-seven redundancies. The DTI in April 2004 announced that £19 million of Government aid was to be provided to the coal industry and £1.8 million was earmarked specifically for development at Ellington. This led to a new two-year agreement with Alcan. At the final review meeting on 5 May the then managing director said that the colliery would remain open as a result of the investment aid and the renegotiation of the Alcan contract, but that it was essential that the colliery continued to meet its production targets, and operating costs had to be kept to a minimum.
  10. In the small hours of 12 January 2005, water began to rise at the face line of the particular seam then being worked. It quickly rose to a depth of two feet. Pumps were installed, but the water was coming in more rapidly than it could be pumped out. Later that morning the water level was too high for production to continue. The colliery surveyor, Mr Whiteside, estimated that approximately 14,000 gallons of water per minute were flooding into the working.
  11. There were three technical issues which were faced when dealing with the water. The first was to have enough pumps and the right kind of pumps. The second was to have pipes of sufficient capacity to take the water away and to pump it into suitable places. There had been a concern that initially the water was being pumped into a position where it was, in fact, circulating back into the seam area. Subsequently, however, there were sufficient pipes to ensure that the water was pumped and dropped a considerable distance from the working.
  12. By 25 January the water level was falling. Earlier, on 17 January, Mr Galloway, the strategy and technical director of UK Coal, approached a company called Rock Mechanic Technology Limited ("RMT") for advice about the implications of the water inflow and also to try and ascertain the source of the water. The company replied by letter of 21 January. It identified four possible sources or routes for the water and said that Ellington had been asked for further information.
  13. Meanwhile, on 21 January Mr Spindler, the managing director of the company, contacted the DTI. He told them that the company was close to announcing the closure of Ellington, with the final decision expected the following week. The email stated that "the economic and risk case for developing a new face are not satisfactory, taking into account the limited reserves available." The briefing document sent with the email stated that the company was seeking to establish what had caused the egress, and to explore the alternatives to find the best way forward. It was stated that "for safety reasons they would not restart the damaged face; that they would need to pump it dry to remove and refurbish or take steps to replace damaged equipment before they could start developing the new tunnel. This would result in a six-month face gap with no production."
  14. The Tribunal noted that this was the first documentary evidence referring to safety factors. However, they also observed that they had heard evidence from, amongst others, Mr Galloway, Mr Huitson, who was the colliery manager, and Mr Haslam, the Director of Human Resources. Whilst all made some passing reference to safety factors in their evidence, the Tribunal found as a fact that "none of them believed there were any safety reasons for closing the colliery. Mr Haslam was particularly clear in his evidence that the case for closing the colliery was an economic one." Surprisingly, Mr Spindler himself did not give evidence before the Tribunal, and nor did Mr Betts, the manager at the colliery
  15. The pit was inspected by Mr Lavery, who was the national chairman of the NUM. He told Mr Haslam that he was delighted with the progress which had been made in pumping out the water. He was asked by Mr Haslam to attend a meeting with Mr Spindler and his team at the colliery on the following day, 26 January. Mr Spindler visited the colliery as arranged. Mr Haslam and Mr Betts, the colliery manager, were also there. They met various NUM and BACM representatives.
  16. The Minutes of the meeting indicate that Mr Spindler said at the outset that the mine would be closed on both safety and economic grounds. The pumping itself was not a safety issue. The respondent would not restart the face for safety reasons. He added that the economics were "disastrous". According to the notes made by Mr Stewart of the NUM, Mr Spindler said that men would be released that same afternoon. Mr Haslam intervened and said that was not correct, but later he said that consultation would start immediately but he (Mr Haslam) did not think that 90 days would be needed because of exceptional circumstances.
  17. A Press Release was distributed after the meeting. This also stated that the company had been forced to cease production for safety reasons. Mr Spindler was quoted as making the following statement:
  18. "The safety of our employees is paramount. Whilst we have contained the flow, the face is flooded and mining adjacent reserves carries unacceptable levels of risk. We are left with no realistic option but to close the mine."
  19. Mr Stewart of the NUM attended a consultation meeting that afternoon. He requested full and meaningful consultations. He assumed that there were certain reports in existence, including an hydrologist's report and a report from HMI. In fact, there were no such reports, although he was not told that. Neither Mr Spindler, Mr Haslam, nor Mr Galloway, attended any consultation meeting. The senior person from the company was Mr Betts, the business manager.
  20. On 27 January 2005, that is the day after the initial meeting, Mr Huitson sent signed letters which purported to be formal letters under section 188 of the 1992 Act. They gave the following reasons for the proposals:
  21. "The reasons as you are fully aware, for the proposed redundancies are namely: special circumstance as a result of our being forced to cease production at the colliery for safety reasons following the penetration of water on the coalface and the unacceptable risks associated with extracting limited nearby reserves."

    The letter stated that there would be ongoing consultation. Whilst the letter itself did not give the proposed date of the first dismissals, a copy of the HR1 was enclosed and that gave a date of 12 February. The HR1 is the document which was sent to the DTI giving information about the proposed redundancies. This stated that the reason for the proposals was:

    "special circumstances as a result of our being forced to cease production at Ellington Colliery for safety reasons following the penetration of water on the colliery coalface and the unacceptable risks associated with extracting limited nearby reserves."
  22. There was a further meeting on 27 January, when Mr Stewart saw Mr Huitson. Mr Huitson said he must release some men on the following Monday. That was four days later. Mr Stewart requested that the company honour the 90 day consultation legislation. His request was apparently acknowledged but he was told that the company would proceed as stated. The following day Mr Huitson told Mr Stewart that he was posting a list of the men required to man the pit. Those not on the list would be placed on garden leave. Again, the Tribunal noted there was no prior consultation about this arrangement. Mr Stewart wrote a letter protesting, saying that the company was not providing time to have proper constructive and a meaningful dialogue concerning the release of the men.
  23. On 28 January Mr Haslam asked Mr Lavery if he wanted to meet the hydrologist engaged by the respondent. He also informed Mr Lavery, however, that it would have no bearing on the decision to close the colliery. It would be for information purposes only since the colliery was closing. Mr Lavery then asked again for a copy of the report, but he was told there was only a letter. He asked for a copy of that letter but that was denied him (these, in fact, were letters from RMT in any event).
  24. The Tribunal found that the reason given by the company for refusing to provide this information was unconvincing. It was that the company did not want Mr Lavery to use these two short letters in order to seek to fight against the closure of the colliery on flimsy evidence.
  25. There was a company board meeting over two days on 31 January and 1 February, and this gave retrospective approval to the actions taken by Mr Spindler. The board were told that the restarting of the coalface was a safety issue. On 31 January Mr Stewart wrote again to Mr Huitson. He said that miners on garden leave were prepared to resume pumping operations, "which may restore action to the face in the next two or three days". The men offered to work round the clock, with no additional cost to the company, in order to man the pumps. Mr Stewart also asked for copies of the hydrologist's report and the health and safety report and for a copy of risk assessments of geological surveys on mining operations in this part of the mine. He received no response.
  26. On 1 February Mr Stewart, and Mr Sawyer of the NUM, attended a consultation meeting led by Mr Betts. Mr Betts said that it would be useful to explain the events leading to the decision to close the mine. He said that experts had taken the view that it would be a further two months to replace all the electrical items damaged by the water and several months before production could continue. The company would have difficulty in sustaining the loss which it estimated to be approximately £20 million. No reference was then made to safety factors. Mr Stewart said he understood there was still £2 million which might be obtained from Government funds for pumping purposes.
  27. On 2 February there was an email sent to the DTI which purported to suggest that it would take seven weeks to pump the face dry if there were no increase at the rate at which the water was coming in, that there was a risk that any movement in the face could lead to further water and that the company "is not prepared to endanger the workforce in this way". The Tribunal noted that there was simply no evidence from any of the experts which supported the notion that there might be the risk of movement of the coal face itself.
  28. There was a further meeting with members of the workforce on 10 February. The Tribunal said that it was "not in any sense a formal consultation meeting". On the same day there was a report from Mr Arthur, one of Her Majesty's Inspectors of Mines. He stated in terms that the water did not constitute a danger to any of the workmen.
  29. Meanwhile, on 4 February, notification had been given to the Environment Agency of the proposal to close the mine. It was necessary to have their permission to stop pumping water. The interest of the Environment Agency is to ensure that there will be no adverse environmental consequences if that is done. The decision adumbrated in that letter, namely that pumping would stop at the colliery the following week, was not information shared with the union.
  30. There were two meetings on 16 February between company representatives and Mr Hammond and Mr Bentley, both of BACM. Mr Hammond asked why the company was not giving the full 90 days' consultation. He was told that it was because the closure resulted from the inrush of water which could not have been foreseen. He had a meeting with Mr Betts in which Mr Betts confirmed that the coal face would not be restarted. Mr Bentley said he could not agree that there was any justification to close the pit on safety grounds, but he could understand the closure on financial grounds. There was then consultation with the NUM on 18 February. Mr Betts gave an update of the situation, but the Tribunal concluded there was no offer to consult on the proposed closures.
  31. On 25 February Mr Huitson told Mr Stewart that the vast majority of the workforce would be released on the following Saturday, namely 26 February. Mr Huitson himself had been given that information only that morning. The reason for the decision having been taken at that stage was that the Environment Agency had confirmed that the earlier permission to close the colliery was still valid. The Tribunal concluded that "there was no consultation at all with the union about the terms of this decision to adopt 26 February as the date when the first compulsory redundancies would take place". The DTI was told on the same date that the redundancies were proposed as a result of "a sudden but irreversible flooding of the coalface". The Tribunal noted that the comment that the flooding was "irreversible" was not based on any objective information or advice.
  32. The first compulsory redundancies of 158 men did indeed take place on 26 February. (Certain employees had been released earlier at their request because they had other jobs to go to.)
  33. Mr Haslam told the Tribunal that the company had resolved to use the time pending the decision to close, and until approval from the Environment Agency, for consultation purposes. The Tribunal found that the consultation was only, however, about such matters as opportunities for alternative employment, arrangements for calculated redundancy and other payments, and the way of dealing with apprentices. The Tribunal recognised that some members of management were unstinting in their efforts to assist individuals to find alternative employment, but much of their consultation was with groups of individuals rather than with the union. The Tribunal added, however (para 9.38):
  34. "During this whole period, whenever the unions made requests or suggestions which Mr Betts had to refer to head office (other than relating to matters such as alternative employment or payment to employees), no more was ever heard of any of these requests or suggestions."
  35. Meanwhile, the DTI was investigating the possibility of repaying some of the investment aid. On 7 October 2005 Mr Spindler wrote to Ms Harding at the DTI claiming that:
  36. "Without being emotive the inrush of water that occurred could be termed as an Act of God, in the nature and capacity of the event."

    He reiterated that the decision to close the mine was taken to ensure the safety of the men. In terms, he stated that it was closed on the grounds of safety and not economic viability. The Tribunal described this statement as "blatantly untrue". In short, the company had been claiming both in its written communication with the union and with the DTI that safety was the reason for terminating these contracts. At the same time, certain managers were recognising in discussions with the unions that economics was also playing a part.

    The law

  37. The statutory provisions relating to the procedure for handling redundancies are found in Chapter II of Part IV of the 1992 Act. The relevant provisions were originally contained in sections 99 – 107 of the Employment Protection Act 1975. They were at that time enacted to give effect to Council Directive 75/129/EEC ("the 1975 Directive"). The 1975 Directive provided for a consultation procedure which had to be followed by the employer. It has now been replaced by Council Directive 98/59/EC. Before setting out the domestic legislation it is necessary to note certain features of this Directive.
  38. Article 1 sets out the concept of collective redundancies. That definition is plainly satisfied here. Article 2 identifies the matters over which consultation should take place and the information which needs to be provided in the following terms:
  39. "Article 2

    1. Where an employer is contemplating collective redundancies, he shall begin consultations with the workers' representatives in good time 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 of mitigating the consequences by recourse to accompanying social measures aimed, inter alia, at aid for redeploying or retraining workers made redundant.

    Member States may provide that the workers' representatives may call on the services of experts in accordance with national legislation and/or practice.
    3. To enable workers' representatives to make constructive proposals, the employers shall in good time during the course of the consultations –
    (a) supply them with all relevant information and
    (b) in any event notify them in writing of –
    (i) the reasons for the projected redundancies;
    (ii) the number and categories of workers to be made redundant;
    (iii) the number and categories of workers normally employed;
    (iv) the period over which the projected redundancies are to be effected;
    (v) the criteria proposed for the selection of the workers to be made redundant in so far as national legislation and/or practice confers the power therefor upon the employer;
    (vi) the method for calculating any redundancy payments other than those arising out of national legislation and/or practice.
    The employer shall forward to the competent public authority a copy of, at least, the elements of the written communication which are provided for in the first subparagraph, point (b), sub-points (i) to (v)."

  40. There is no remedy or sanction specifically provided. However, Article 6 requires that administrative or judicial procedures must be made available for the enforcement of these obligations.
  41. Furthermore, Article 10 of the EC Treaty requires member states to take all measures necessary to ensure that infringements of Community law are "penalized under conditions …. which, in any event, make the penalty effective, proportionate and dissuasive." (Commission v Greece [1989] ECR 2965 at p2985 para 24.)
  42. The transposition of the duty into domestic law is contained in section 188 (1) and (1A) of the 1992 Act which (as amended) provide:
  43. "Duty of employer to consult … representatives
    (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.
    (1A) The consultation shall begin in good time and in any event –
    (a) where the employer is proposing to dismiss 100 or more employees as mentioned in subsection (1), at least 90 days, and
    (b) otherwise, at least 30 days,
    before the first of the dismissals takes effect."

  44. It is to be noted that the obligation to consult under the statute arises only once there is a proposal to dismiss. This does not reflect the language of the Directive which requires consultation when dismissals are "contemplated." The courts have held that notwithstanding the obligation to seek to interpret domestic law consistently with EU law, it is not possible to construe "proposed" as the equivalent of "contemplated": see the observations of Glidewell LJ in R v British Coal and Secretary of State for Trade and Industry ex parte Vardy [1993] ICR 750 followed by Lindsay P, giving the judgment of the EAT in MSF v Refuge Assurance plc [2002] IRLR 324 para.42 ; and to similar effect the judgment of the EAT (Lord Johnstone presiding) in Scotch Premier Meat Ltd v Burns [2000] IRLR 369. As Lindsay P said in the MSF case, the obligation to consult when redundancies are contemplated means when they are envisaged as a possibility; it is a more amorphous and earlier state than the point in time when they are proposed; the proposed redundancies occur at a later stage when the state of mind is more certain. His Lordship cited a definition of "to propose" from the Oxford English Dictionary, namely "to lay before another or others as something which one offers to do or wishes to be done."
  45. It is clear, however, following the decision of the ECJ in Junk v Kuhnel [2005] IRLR 310 that even if the obligation does not arise until there is a proposal, that must be prior to any formal decision to dismiss being taken. In Junk the ECJ observed (paras 36-39):
  46. "36. The case in which the employer 'is contemplating' collective redundancies and has drawn up a 'project' to that end corresponds to a situation in which no decision has yet been taken. By contrast, the notification to a worker that his or her contract of employment has been terminated is the expression of a decision to sever the employment relationship, and the actual cessation of that relationship on the expiry of the period of notice is no more than the effect of that decision.
    37. Thus, the terms used by the Community legislature indicate that the obligations to consult and to notify arise prior to any decision by the employer to terminate contracts of employment.
    38. Finally, this interpretation is confirmed, in regard to the procedure for consultation of workers' representatives, by the purpose of the Directive, as set out in Article 2(2), which is to avoid terminations of contracts of employment or to reduce the number of such terminations. The achievement of that purpose would be jeopardised if the consultation of workers' representatives were to be subsequent to the employer's decision.
    39. The answer to the first question must therefore be that Articles 2 to 4 of the Directive must be construed as meaning that the event constituting redundancy consists in the declaration by an employer of his intention to terminate the contract of employment".
  47. In the light of this decision, in Leicestershire County Council v Unison [2005] IRLR 920 the EAT ( HHJ McMullen QC presiding) held that "proposing to dismiss" in section 188(1) must be interpreted as "proposing to give notice of dismissal", and that accordingly consultation must be completed before notices of dismissal are given to the workforce.
  48. Section 188 (1B) provides who are the appropriate representatives of any affected employees. In this case it is the recognised union officials. By section 188 (2):
  49. "The consultation shall include consultation about ways of –
    (a) avoiding the dismissals,
    (b) reducing the numbers of employees to be dismissed, and
    (c) mitigating the consequences of the dismissals,
    and shall be undertaken by the employer with a view to reaching agreement with the appropriate representatives."

  50. It is pertinent to note that this was a new provision introduced in 1995 but giving effect to the provisions in Article 2 of the 1975 Directive. Before then the obligation under domestic law was simply to consult "about the dismissals." Even so, as we shall see, the assumption has been since the Vardy case that there is no obligation to consult over the reason for the redundancies themselves, even although this necessarily limits the opportunity to consult over ways of avoiding redundancies. So the traditional view has been that where there is a closure, there is no reason to consult about the reasons for that. Whether that principle is correct is a matter raised in the cross appeal, and we deal with the arguments later in this judgment.
  51. Section 188 (4) identifies the information which needs to be given to the union or other representatives in order to facilitate the consultation:
  52. "For the purposes of the consultation the employer shall disclose in writing to the appropriate representatives –
    (a) the reasons for his proposals,
    (b) the numbers and descriptions of employees whom it is proposed to dismiss as redundant,
    (c) the total number of employees of any such description employed by the employer at the establishment in question,
    (d) the proposed method of selecting the employees who may be dismissed,
    (e) the proposed method of carrying out the dismissals, with due regard to any agreed procedure, including the period over which the dismissals are to take effect, and
    (f) the proposed method of calculating the amount of any redundancy payments to be made (otherwise than in compliance with an obligation imposed by or by virtue of any enactment) to employees who may be dismissed."

  53. Section 188(7) provides for the exceptional case where the employer is relieved from the full duty of consultation:
  54. "(7) If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with a requirement of subsection [(1A), (2) or (4)], the employer shall take all such steps towards compliance with that requirement as are reasonably practicable in those circumstances."

  55. It is to be noted that there are two elements that must be satisfied before this provision applies. Not only must it be not practicable to comply fully with the obligations, but in addition it is necessary for the employer to take all reasonably practicable steps towards compliance. Section 189(6) puts the burden of establishing both these issues firmly on the employer:
  56. "(6) If on a complaint under this section a question arises –
    whether there were special circumstances which rendered it not reasonably practicable for the employer to comply with any requirement of section 188, or
    whether he took all such steps towards compliance with that requirement as were reasonably practicable in those circumstances,
    it is for the employer to show that there were and that he did."

  57. Section 189 provides for the raising of complaints and the sanction. As to the latter it is provided that:
  58. "….
    (2) If the tribunal finds the complaint well-founded it shall make a declaration to that effect and may also make a protective award.
    (3) A protective award is an award in respect of one or more descriptions of employees –
    (a) who have been dismissed as redundant, or whom it is proposed to dismiss as redundant, and
    (b) in respect of whose dismissal or proposed dismissal the employer has failed to comply with a requirement of section 188,
    ordering the employer to pay remuneration for the protected period.
    (4) 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 …."
  59. The Court of Appeal has held that this is a penal provision and that "the required focus is not on compensating the employees but on the default of the employer and its seriousness. It is that seriousness which governs what is just and equitable in all the circumstances.": per Peter Gibson LJ in GMB v Susie Radin [2004] ICR 893 , para.26. Furthermore, as his Lordship made clear in the same case (para 45), it is no answer to a failure to consult collectively (as it might be in an unfair dismissal case) that any such consultations would have been utterly futile.
  60. The Tribunal's decision.

  61. The employers contended before the Tribunal that since in the light of the authorities they did not have to consult over the closure at all, it was immaterial that they in fact gave a false or misleading reason of safety. There can be no breach where a false reason is given if no reason need be given. Similarly, since the purpose of the information was to facilitate consultation, it mattered not what information was given, or whether it was true or false, once it was accepted that no duty to consult arose.
  62. The Tribunal, whilst accepting that the authorities did indeed establish that there was no obligation to consult over the closure, nonetheless rejected this argument in the following terms (para 22):
  63. "…In the real world employers cannot announce closures, leading to several hundred redundancies, without giving at least some indication of the reason for the closure decision itself. In any event, if the employer chooses to give the information, it is important that the information should be true and should be given in good faith. The whole purpose of the consultation process would be subverted if employers could with impunity give false information in the formal section 188 letters."

  64. The Tribunal then dealt with various issues raised before them. First, they found that there was no credible evidence that the reason for the dismissals was safety. This was entirely and deliberately misleading and involved a breach of section 188(4)(a). The real reason was economic. The Tribunal said that the company "was prepared to give whatever reasons suited it at the time." They were not prepared to accept that this was simply a technical matter (para 36):
  65. "…We take a very serious view of this deliberate breach of its obligations by the respondent. It is difficult to see how there can be constructive and meaningful consultation with an employer if the information given by that employer, in a formal document provided for the purpose of the consultations, is deliberately falsified. Furthermore, the mutual trust which needs to exist between the employer and the unions, if there are to be successful consultations, is put at risk if the unions have cause to believe that they have been given false information."

  66. The Tribunal rejected a union submission that consultation ought to have begun on the 22 January, but held that ought to have commenced on the 26 January. However, by then (para 38):
  67. "…there was not only a redundancy proposal but a firm and final decision to dismiss as redundant more than 100 employees as soon as permission to turn off the pumps could be obtained. Consultation on issues of principle was therefore never possible because there was never any interval between the announcement of the redundancy proposal and a decision to proceed with the redundancies as proposed."

  68. The Tribunal set out chapter and verse for that conclusion which we need not rehearse. The Tribunal also found that there was "literally no consultation" on the related issue of the date of dismissals. Union officials were told at the same time as the workforce; the DTI were better informed than the union. The company was not prepared to consult with any attendant delays in dismissals. The Tribunal's conclusions as to the nature and degree of the consultations were summarised thus (paras 39-40):
  69. "39 We conclude therefore that there was no consultation at all about the matters of principle, what Mr Dyer termed the macro matters. We also conclude that there was no consultation about any matter at all when the redundancy proposal was still at a formative stage.
    40 We do note, however, that there were several meetings, particularly with Mr Stewart, about matters which were of great concern to individuals and particularly the opportunities for alternative employment and the calculation of redundancy and other payments. There were also other specific issues, such as the arrangements for the continued employment of the four apprentices. Mr Huitson, Miss Kaye, Mr Mitchell and Mr Strachan all worked tirelessly and conscientiously to deal with all these matters. We do not wish in any way to minimise their efforts, however, when we add two qualifications. The first is that the work which they did was from the corporate (although not the personal) point of view self-serving, because the respondent thereby avoided unfair dismissal claims by individuals. Secondly, much of the relevant consultation took place not in union meetings (indeed there were very few meetings attended by anyone from BACM) but at meetings with groups of employees or with individuals."
  70. The Tribunal then turned to the question of special circumstances. This was relied upon by the company as an explanation for the very limited consultation and in particular why the notices of dismissal had been given prior to the consultations being completed. The argument was that the flooding had created an unforeseen event which ought to be treated as relieving the employers of the duty to consult. The Tribunal gave this argument short shrift, both because of the lack of evidence supporting this, and because in any event there had been a failure to take such steps towards compliance as were reasonably practicable (paras 43-44):
  71. "43 We have not heard sufficient evidence to satisfy us that on an objective view it was not reasonably practicable for the respondent to continue consulting beyond 26 February. It seems to us that it would not be unfair to characterise the closure and redundancy proposals as proposals which appeared to have been made on the basis of "back of envelope" calculations. In addition those proposals assumed a worst case scenario. We saw no relevant documents and heard no convincing evidence to show that, for example, that there had been any cost benefit analysis of the possibility of pumping the face dry to salvage the shearer and other equipment. The figure which Mr Haslam quoted, of £1/2m per week, was the total cost of running the mine. The labour cost was only about half that amount. The figure also assumed that all the workforce would go – in fact there was a need to retain employees, in particular for the washery, for a period well beyond 26 February. The time estimates for pumping the face dry were pessimistic and do not appear to have been based on any informed expert advice.
    44 More importantly, however, even if there were special circumstances which made full compliance with the requirements of the statute not reasonably practicable, the respondent did not take all such steps towards compliance as were reasonably practicable in the circumstances. It was reasonably practicable for the respondent to give the true reason for the redundancy proposals. It was also reasonably practicable for the respondent to consult between 26 January and 26 February. The special circumstances defence fails on that ground alone."

  72. Finally, the Tribunal turned to consider the amount of compensation payable under the protected award. They concluded that in the circumstances the maximum award should be made to all the workers. They explained their reasoning as follows (paras 46-49):
  73. "46 This is a case of deliberate and very serious breaches of the statutory requirements. The respondent deliberately gave a false reason for the proposals, deliberately failed to consult whilst the proposals were at a formative stage and deliberately failed to consult at all on any matter which could have affected the timing of the first batch of compulsory redundancies. This is a bad case and the maximum protected period of 90 days must be appropriate unless there are mitigating circumstances.
    47 We have considered whether the discussions which did take place after 26 January, about such matters as alternative employment and payments to employees, are sufficient mitigation to justify reducing the 90 day period. We have concluded that they are not. Their importance is outweighed by the deliberate act of the respondent in giving a false reason for the redundancies – a rare if not unique feature of this case and one which makes the case particularly serious. The guidance in the Susie Radin case expressly includes consideration of the deliberateness of the failure. That is a serious aggravating factor in this case and one which outweighs any mitigation.
    48 We have considered carefully all the factors listed in the Susie Radin case. We can see no other mitigating circumstances.
    49 In particular, it is immaterial in this context that the obligation to consult was a very limited one, because of the principle that there was no need to consult about the decision to close the mine. It is clear from the guidance in Susie Radin, which was itself a case of redundancies caused by a closure decision, that the purpose of the protective award is punitive not compensatory."

    The grounds of appeal.

  74. The grounds of appeal raise a number of specific issues. They can, we think, fairly be considered under the following heads. First, at the heart of the appeal is the contention that the Tribunal fundamentally misdirected itself about the nature of the employer's breach. It is submitted that this in turn affected various other conclusions. In particular, it is alleged that the Tribunal misdirected itself on the two important questions of whether there were special circumstances; and what the protected award ought to be.
  75. The extent of the failure to consult.

  76. The employer's principal argument is, as Mr Reade QC, their counsel, frankly concedes, unattractive. Indeed, he submits that the Tribunal was wrongly influenced by the merits of the argument- or lack of them - in its analysis. He recognises that he is constrained to accept the Tribunal's finding that the employers sought falsely to represent the reason for the closure, but he says that however reprehensible that may be, it is ultimately not to the point. Since, as the Tribunal accepted, there was no obligation to consult over the decision to close the pit, and no obligation to give reasons for the closure at all, there could be no infringement of section 188 in circumstances where the employer voluntarily chose to give such reasons, even if those reasons were false or misleading. If you do not have to consult at all, you cannot be in breach in voluntarily consulting whether in a truthful or misleading way. Moreover, the employers did indirectly provide the reason for the dismissal because they gave a copy of the HR1 to the unions. That document stated that the pit would be closed.
  77. Mr Reade submits that although the Tribunal did indeed ostensibly accept that the effect of the authorities was that there was no duty to consult about the closure, they did not thereafter follow the logic of that finding. Their analysis was in fact premised on the assumption that the employers could be criticised for failing to consult properly over these issues. Moreover, this fundamental error tainted their approach to other issues, such as the question whether there were special circumstances, and the amount of compensation. They based the maximum award on the assumption that there had been a wilful and deliberate breach of the consultation obligation whereas in fact there had been some consultation over the issues which were properly the subject of that duty, namely the avoidance of redundancies by redeployment, and the amount of compensation.
  78. In view of these errors, Mr Reade submits that the Tribunal's decision is fundamentally flawed and the case ought to be remitted to a fresh tribunal.
  79. The two unions, in their cross appeal, question the starting point of Mr Reade's argument. They submit that properly analysed, there is an obligation to consult over the reason for the redundancy, and where that is the closure, this involves consulting over the reasons for that decision. They contend that the dictum of Glidewell LJ in R v British Coal and Secretary of State for Trade and Industry ex parte Vardy [1993] ICR 720, and the cases which have subsequently adopted his analysis, ought to be reconsidered in the light of the fact that the consultation obligations have been changed since the Vardy decision. We consider this more fully below.
  80. In any event, they submit that even if the Tribunal were right to conclude that there was no duty to consult over the closure itself, there was a duty to give reasons for the redundancies. In this case the reason in fact given in writing was health and safety. Economic considerations had also been mentioned in the oral discussions, but they were not identified in the subsequent letter. This was the reason in fact given and it was false; it was not the true reason, and the union was thereby encouraged to meet a case that was always untrue. Having identified this as the reason, and the Tribunal having concluded that it was false, there was no basis on which the Tribunal's conclusion could be challenged.
  81. The fact that the employers could have identified the reason as the closure, and thereafter refused to reopen that question, was immaterial since that was not the reason they gave. It was not for the union to infer that the real reason was other than the reason given. Of course, the union knew of the intention to close the plant, but there was no intrinsic reason why the real reason for the redundancies could not be the safety of the pit. Had that reason been true, it might have prevented the continuing employment of the miners (save for those carrying out pumping work who would have been required for a short period) and this could have led inevitably to the closure of the plant, but the unions could reasonably have understood that there was to be consultation about that. Moreover, it was artificial to distinguish the reason for the closure and the reason for the dismissals, since they were inextricably interlinked. The employers could not simply, after the event, seek to deny the significance of the reason given.
  82. We agree with the unions' submission. The employers failed to comply with their obligations under section 188(4) (a) by giving a false reason; it cannot be the case that there is compliance when a deliberately misleading reason is given. Moreover, that conduct thereafter affected the nature of the consultation that did take place. In principle, there was no reason why there could not have been consultation over the health and safety risks, and the employers did not suggest to the contrary.
  83. Special circumstances.

  84. Perhaps the most significant issue in this case, at least in terms of its effect on the amount of the protective award, concerned the question whether the employer could rely upon special circumstances so as to justify their failure to consult over the full 90-day period. They relied before the Tribunal on the economic problems which were exacerbated by the sudden influx of water.
  85. The unions contended before us that the employers fell at the first hurdle because the problems were not of a nature which could properly fall within the category of special circumstances as that has been analysed by the authorities. The employers dispute that. However, it is not necessary for us to determine this question since it was not, in fact, the basis on which the Tribunal reached its decision. They appear to have acted on the premise that the employers might in principle be able to establish special circumstances. However, they found against the employer on the grounds that the Tribunal were not satisfied from the evidence – and the onus was on the employer – that the situation was such as to justify a conclusion that the circumstances were special.
  86. Mr Reade submits that the Tribunal here reflects the earlier error. It is assuming an obligation to consult over the economic decision to close the plant. We reject that. The issue here is not about consultation: it is whether the employer can satisfy the Tribunal that there were in fact economic circumstances of such a nature justifying the failure to consult from 22 February. That required the employers to lead evidence on that matter. The evidence was, in the Tribunal's view, thin and unconvincing and had the character of "back of the envelope" calculations.
  87. That can be challenged only if the Tribunal reached a decision on the evidence which was perverse, i.e. one which is outrageous or in defiance of the evidence: see Yeboah v Crofton [2002] IRLR 634. In our judgment that is an impossible claim to sustain. The designation of the circumstances being "special" shows that the situation when this defence can be relied upon will be exceptional. The Tribunal properly required detailed evidence, and they were not given it.
  88. In any event, the Tribunal concluded on the alternative ground that the employers did not carry out such consultation as was reasonably practicable in all the circumstances. Mr Reade contends that this decision too is flawed because the Tribunal assumed that the consultation had to take place over the closure itself.
  89. However, even assuming that to be the case, it is plain that the Tribunal has also determined that there were various other respects in which the employers failed to comply with their obligations. An obvious and important example is over the time during which the dismissals would be implemented. The Tribunal found that there was simply no consultation on that at all. They also found that in other respects there was insufficient consultation through the formal union channels even though there was discussion with individuals and groups of workers. These findings alone sustain the decision of the Tribunal on this point, and make it unimpeachable.
  90. The fixing of a penal award.

  91. On any view therefore, there was a marked failure to comply with the legal obligations. The further issue, however, is whether the Tribunal were entitled to conclude as they did that the employer should pay the maximum amount by way of a compensatory award.
  92. Mr Reade submits that they could not properly do that, or even if the possibility was open to them, they had reached the decision in this case on a false premise. He reiterates here his submission that the Tribunal, albeit ostensibly accepting that there was no obligation to consult over the closure, did in fact require that such consultation should take place. He submits that this must significantly have influenced the Tribunal's whole perception of the employer's position. When fixing a penal award they would therefore have identified the failure as being more fundamental than it in fact was.
  93. He also contends that the Tribunal did not make a finding that there was no consultation at all. It appears to have recognised that there was some consultation through union channels over such issues as the alternative employment and the amount of redundancy compensation. Accordingly, he submits that the Tribunal ought not to have imposed the maximum award. That should be limited to cases where there was a simple blatant refusal to consult at all.
  94. Finally, he complains that the Tribunal stated that the employers ought to have consulted over the special circumstances whereas in fact there is no such obligation.
  95. The unions deny that there was any error by the Tribunal. The calculation of the award is just and equitable having regard to the default of the employer and its seriousness, as the observations of Peter Gibson LJ in GMB v Susie Radin Limited [2004] ICR 893 para 26, reproduced above, make plain. Moreover, the fixing of the award is classically a matter for the Tribunal, which the EAT can only question if the Tribunal below has failed to follow the guidelines identified in the Susie Radin case, or misunderstood the evidence, or reached a perverse conclusion: see the observations of Laws LJ in the Court of Appeal in Leicester County Council v Unison [2006] IRLR 810, para. 34.
  96. They submit that given the findings of the Tribunal, and in particular the conclusion that there was a deliberate attempt to mislead the unions as to the real reason for the dismissals, coupled with the failure to consult save in the most limited way over marginal issues, the Tribunal's conclusion was perfectly sustainable. Even if other tribunals might have allowed some marginal reduction for such very limited consultation as there was, the Tribunal was entitled to take the view that this was a very serious and fundamental failure to comply, and that such limited consultation as there was did not in any material way mitigate the seriousness of the conduct.
  97. We agree with that argument. It seems to us that the employer's submission rests on the premise that if there has been some consultation, however limited, then the Tribunal is compelled thereby to reduce the compensation below the maximum. No doubt that is true where such consultation as does take place is more than minimal. However, the Tribunal clearly felt that that was all that it was here and we do not think that they erred in taking a grave view about the deliberate deception that was perpetrated by the employer in their dealings with the unions. We accept that strictly there is no obligation to consult over special circumstances as such, but there is a duty to consult over the dates of dismissal, which in practice amounts to much the same thing since it raises the reason why the employers could not delay giving notice of dismissal until the consultations had taken place. Accordingly, that particular point has no substance.
  98. The cross appeal

  99. The unions submit that the premise of the employer's appeal, namely that they were not obliged to consult at all over the closure, is wrong. They submit that the authority which is the source of this doctrine, namely the decision of the Divisional Court in the Vardy case, has to be seen in the context of the legislation as it was at the time, and that the obiter comments in that case no longer hold good in the light of the amendments made to section 188 in 1995.
  100. It is necessary to start by considering the Vardy case. This was in fact a judicial review of the decision take by British Coal Corporation to close 31 deep mine collieries. The issue before the court was whether there was any obligation to consult the unions over the proposed closures pursuant to section 46 of the Coal Industry (Nationalisation) Act 1946. The court found that there was. In the course of their judgments, however, they also made certain obiter observations about the scope of the consultation obligation under section 188 of the 1992 Act. At that time section 188 only required consultation "about the dismissal". Lord Justice Glidewell said this (page 752A):
  101. "In my judgment, this section does not require a consultation about the reason for the redundancy, including whether or not a plant should close. I agree with the passage in the current edition of Harvey on Industrial Relations and Employment Law at
    para 1365, p.III/454:
    "In substance, the Act places on employers an obligation to plan any redundancy programme well in advance, and to do so in conjunction with the unions where appropriate. Although it is mainly directed at larger scale redundancies, it should be emphasised that its provisions also apply where the employer proposes to make even one single employee redundant. However, according to the interpretation so far placed upon the Act by the English courts, the obligation is not so much to consult with the unions on whether there should be redundancies, but rather to consult on how to carry out any redundancy programme which management deems necessary."

  102. Later in his judgment, His Lordship considered the scope of Article 2(2). He made it clear that, unlike the domestic legislation, he considered that this would involve consultation over the proposal to close a particular establishment. His reasons were as follows:
  103. "By Article 2(2) the scope of the consultations is in part defined. In my view the fact that consultations are to begin as soon as the employer contemplates redundancies and that they are to include ways and means of avoiding redundancies indicates that the Directive is to be interpreted as including consultation on ways of avoiding redundancies by not closing the particular establishment, if that is what the employer has in mind."

  104. As we have already indicated, however, he did not think that section 188 could then be construed compatibly with the Directive because the statute envisaged consultation only after a proposal had been made, whereas the Directive envisages that it must occur when the dismissal is contemplated.
  105. Hidden J, who gave a short concurring judgment, also briefly referred to Article 2(2). He indicated that he would have been prepared to conclude that the obligation to consult over the proposed closure was required by the terms of Article 2(2) of the Directive, had it been applicable: see page 765(D).
  106. The decision in that case has subsequently been followed in Middlesbrough Borough Council v TGWU [2002] IRLR 332. The EAT (HHJ Clarke presiding) said this (para. 45):
  107. "(3) Subject-matter of consultation
    We have earlier observed that the employer is not obliged to consult as to his reasons for proposing redundancies: ex parte Vardy. However, consultation must ('shall') include consultation about ways of avoiding dismissals: reducing the number of employees to be dismissed and mitigating the consequences of the dismissal, and shall be undertaken with a view to reaching agreement with the unions: s .188(2)."

  108. Both decisions were in turn relied upon by another division of this Tribunal (Burton P presiding) in Securicor Omega Express Ltd v GMB [2004] IRLR 9. In that case the employers decided to close two branches and make redundancies. They presented the closure as a fait accompli to the union representatives. The Tribunal found that this involved a failure to consult about ways of avoiding redundancies because the decision to close had been determined prior to any meeting with the union. The EAT upheld the employer's appeal. Mr Justice Burton said this:
  109. "In the light of that analysis of the law, we turn to our conclusions on the facts of this case. We are satisfied that the Tribunal erred in law. The fundamental way in which they erred was the approach they took in paragraphs 23 and 25 of the decision, in which the tribunal concluded that because there had been no consultation in relation to the decision to close the branches, therefore, there could not be held to have been consultation at all. Judge Clark in his summary of the law, to which we have referred, and with which we agree, in Middlesbrough, expressly referred to the decision in Vardy (R v British Coal Corporation and Secretary of State for Trade and Industry ex party Vardy and others [1993] IRLR 104), a decision of the Divisional Court, given on behalf of the Court by Glidewell LJ. In that lengthy judgment at paragraph 116, Glidewell LJ, having referred to s.188, said this:
    'In my judgment this section does not require a consultation about the reasons for the redundancy, including whether or not a plant should close.'"
  110. The unions contend that it makes a mockery of the obligation to consult over the ways of avoiding redundancies if the decision to close down the plant is beyond discussion. Moreover, what is the point, they rhetorically ask, of providing information that the reason for the proposed dismissals is the closure if there can be no consultation over it? They contend -and Mr Reade did not seriously dispute this - that Article 2(2), if properly implemented into domestic law, would require consultation over closure. They say that it had not been sufficiently transposed when the Vardy case was decided, because there was no duty at that stage to consult about ways of avoiding the dismissals, but only about the dismissals themselves. However, given the obligation even under domestic law to consult over the avoidance of dismissals, that has significantly widened the scope of the consultation obligation, and has extended it to consulting about the reasons for the closure itself.
  111. Mr Reade recognises that the duty has since Vardy extended to consulting over avoiding redundancies, but he submits that this still does not embrace a duty to consult over the reasons for closure. The reason is that the duty is still limited to the situation where the dismissals are proposed, in contrast with the position under EU law where it arises when they are contemplated. This distinction, he submits, does not simply impact on the point in time when consultation arises; it also affects the scope of the duty itself. The focus on what is contemplated opens up a much wider range of matters on which consultation should occur.
  112. We prefer the submissions of the two unions. We have no doubt that the court in the Vardy case was correct in saying that under EU law the obligation under Article 2(2) does require consultation over a decision to close a plant. Moreover, as counsel for the unions point out, given the very broad obligation to consult over all sorts of economic decisions under the Information and Consultation of Employees Regulations 2004, including consultation over the undertaking's economic situation (reg 20(1)), it would be strange if this did not apply to that situation at the very point where loss of jobs was envisaged. It is true that under those Regulations where there are collective redundancies these duties cease to apply once section 188 is triggered ( see reg. 20(5)), but it would be bizarre if the scope of the latter duty were more limited. That would mean that there was no such duty at the very point where the interests of the employees are most crucially engaged.
  113. The issue, however, is whether it is possible to give effect to section 188 so as to achieve that result. One way potentially would be to read "proposed" so that it means "contemplated." That would bring domestic law wholly in line with the Directive. However, as we have indicated above, both the Divisional Court in Vardy and the EAT in MSF v Refuge Assurance plc [2002] IRLR 324 have expressed the view that even given the generous scope for interpreting rules compatibly with EU law, this would step beyond the legitimate parameters. We have some reservations about that conclusion, but in an area where that assessment is very much a matter of impression, we feel that it would be wrong for a court at this level to depart from those established decisions.
  114. The question is, therefore, whether the limitation imposed by the word "proposed", when contrasted with "contemplated", prevents the consultation obligation extending to consultations over closures leading to redundancies. We do not think that it does. In our judgment, in a closure context where it is recognised that dismissals will inevitably, or almost inevitably, result from the closure, dismissals are proposed at the point when the closure is proposed. The difference between proposed and contemplated will still impact on the point at which the duty to consult arises - it will not be when the closure is mooted as a possibility but only when it is fixed as a clear, albeit provisional, intention.
  115. But the obligation to consult over avoiding the proposed redundancies inevitably involves engaging with the reasons for the dismissals, and that in turn requires consultation over the reasons for the closure. Strictly, of course, it is the proposed dismissals that are the subject of consultation, and not the closure itself. Accordingly, if an employer planned a closure but believed that redundancies would nonetheless be avoided, there would be no need to consult over the closure decision itself, at least not pursuant to the obligations under the 1992 Act. In the context of a closure, that is likely to be a very exceptional case. Where closure and dismissals are inextricably interlinked, the duty to consult over the reasons arises.
  116. We should add that the lay members do not believe that in practice this will alter arrangements very much. Most employers will already inform union representatives why they are considering the need to close a plant and will respond to any union observations, even if they do not feel themselves legally obliged to do so.
  117. We recognise that we are departing from two relatively recent decisions of the EAT, but they were simply following the observations in Vardy, and in neither was it argued that the decision in Vardy was dictated by the different statutory provisions then in force.
  118. We also accept that in substance there is no distinction in practice in this case at least between the closure and the dismissals. Indeed, if anything it could be said that the closure followed the dismissals, rather than the dismissals following the closure since the labour costs were a significant cause of the economic problems. It is artificial to treat the closure as the reason for the dismissal. The true reason was the economic difficulties facing the employers. Mr Reade accepted that if the decision had been to make cost savings by, say, making half the workers redundant, then the employers would in principle have had to open up consultations about possible ways of avoiding those redundancies. There is no logic in treating the proposed dismissal of the whole workforce, resulting in a closure, any differently. In each case the factors causing the dismissals are economic; the only difference lies in the proportion of the workforce whom it is proposed to dismiss.
  119. Disposal.

  120. The appeal fails and the cross appeal succeeds. We declare that the employers ought to have consulted over the reason for the closure, which was in substance the reason for the dismissals.
  121. There was an appeal against a costs order but Mr Reade accepted that it would necessarily fail if the substantive appeal failed. We need therefore say no more about it.

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