Baxter & Others v Limb Group Of Companies

Redundancy entitlement requires two separate findings: a redundancy situation existed when dismissal occurred, and that situation caused the dismissal wholly or mainly. The existence of reduced or ceased requirements for employees does not itself establish the reason for dismissal. Where industrial action generates both dismissal and the employer’s decision to replace direct labour with contract labour, the use of associated-company workers does not change the causative reason. The Court may substitute its own view where an employment tribunal’s conclusion is plainly and unarguably wrong.

Twenty-six Goole dock workers refused to work overtime during a dispute about working practices. The employers warned that continued industrial action might lead to dismissal and summarily dismissed them. They subsequently discontinued direct labour and used workers supplied by associated companies.

The Industrial Tribunal rejected the employees’ bad-faith allegation but held that the dismissals were wholly or mainly by reason of redundancy. The Employment Appeal Tribunal allowed the employers’ appeal, treated the findings as inconsistent and remitted the claims for rehearing. The employees appealed, while the employers cross-appealed for substitution of a finding that dismissal resulted from industrial action. The central issue was whether the redundancy situation caused the dismissals.

Majority. Lord Justice Dillon, with whom Lord Justice Steyn agreed, held that the statutory redundancy inquiry required separate consideration of the existence of a redundancy situation and its causal connection with dismissal. A redundancy situation existed where the employer’s requirements for direct dock labour had ceased, but that did not answer whether the dismissals were attributable wholly or mainly to redundancy.

1. The employees’ industrial action generated both their dismissals and the employers’ decision to cease using direct labour and obtain dock workers through associated companies. It made no difference that replacement labour was supplied as contract labour rather than by newly engaged employees. The redundancy situation was therefore a consequence of the industrial action, not the reason for dismissal.
2. The majority applied the reasoning in [1974] ICR 565: a redundancy situation may exist without causing the dismissals. The Industrial Tribunal’s conclusion that the dismissals were by reason of redundancy was a non sequitur and plainly and unarguably wrong.
3. Because the primary facts were unimpeachable and the correct legal inference was clear, the Court was entitled to adopt its own view rather than order a rehearing. Lord Justice Steyn considered that the ordinary and natural meaning of the Tribunal’s language supported this conclusion and that benevolent interpretation could not create an ambiguity.

Dissent. Lord Justice Waite would have allowed the employees’ appeal. He considered that the Industrial Tribunal could examine the whole course of events, including events after dismissal, and draw appropriate inferences. He would have interpreted the Tribunal’s confusing reasons benevolently and restored its declaration that the dismissals were by reason of redundancy.

The appeal was dismissed and the cross-appeal allowed with costs in the Court of Appeal. The Employment Appeal Tribunal’s order was set aside. There was no order as to costs in that tribunal, and the employees’ applications to the Industrial Tribunal were dismissed.

• Court of Appeal (Civil Division) — Appeal dismissed and employers’ cross-appeal allowed; the Employment Appeal Tribunal’s order was set aside: [1994] EWCA Civ 29.
• Employment Appeal Tribunal — Employers’ appeal allowed on the basis that the Industrial Tribunal’s findings were inconsistent; claims remitted for rehearing before a different tribunal.
• Industrial Tribunal — Bad-faith unfair-dismissal allegation rejected; dismissals held to be by reason of redundancy and fair.