Hart v Navan at Armagh Management Ltd  (Unfair Dismissal, Redundancy Payment, Breach of Contract, Unlawful Deduction from Wages)  (29 July 2002)
THE INDUSTRIAL TRIBUNALS

CASE REF:	3033/01

APPLICANT:	Anne Hart

RESPONDENT:	Navan at Armagh Management Limited 

DECISION
The unanimous decision of the tribunal is that the applicant was not unfairly dismissed and her claim for this is hereby dismissed.  The applicant is entitled to receive compensation for the various heads of damage set out in paragraph 13 of this decision in the total of £6,656.80 and the respondent is ordered to pay this sum to the applicant.  

Appearances:
The applicant was represented by Alison Millar of NIPSA.
The respondent was represented by Mr H Coll of Elliott Duffy Garrett, Solicitors.

The tribunal found the following facts:-

1.	The applicant was employed by the respondent as an Education Officer from September 1992 to June 2001.  The applicant was a highly committed employee.

2.	The applicant’s employment with the respondent was terminated on 4 June 2001 by reason of redundancy.  The law relating to this issue is found in Article 174(1)(a) of the Employment Rights (NI) Order 1996 which states 

“… an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to –

(a)	the fact that his employer has ceased or intends to cease –
(i)	to carry on the business for the purposes of which the employee was employed by him, …”

3.	The employees of the company in general had been informed by Mr G Priestly, Chairman of the Board of the company that because of the financial situation in which the company found itself, it could not continue to trade and that the business was closing with effect from 5.00 p.m. on 4 June 2001.  

4.	The tribunal finds that the business did close and that the respondent can clearly bring the fact situation within the confines of Article 174(1)(a).  The applicant was undoubtedly redundant.

5.	No collective redundancy situation arose as the number of employees dismissed in total was 13.  

6.	The background to the redundancy situation was that there were concerns over the funding of the Navan Centre from March 2001.  On 9 March 2001 members of the respondent board met with the Department of Culture, Arts and Leisure to present a business plan to achieve further funding.  The directors who attended that meeting left with the impression that they would receive interim funding until June of that year.  When Mr Priestly returned to his duties after being in hospital, he contacted the Department of Culture, Arts and Leisure to draw down funding at the end of April 2001, to be told “what funding?”.  As a result of this conversation a special board meeting was held on 18 May 2001 at which Mr Priestly noted that without a likely source of funds, the Centre was technically insolvent.  It was decided to issue protective notices of redundancy to the employees of the company.  On 21 May 2001, Mr Priestly went down to the Navan Centre and talked to the bulk of the employees of the company.  Although the applicant did not dispute the fact that Mr Priestly came down and spoke to her indicating that there were funding difficulties, she denied that any notice in any form of impending redundancy had been given to her or any other employee of the company at that time.  The applicant’s view was that the company had endured funding difficulties previously and had always managed to succeed in obtaining necessary funding.  The applicant gave evidence as to her shock and distress on 4 June 2001 at being told that the Centre was closing immediately that day.  On the balance of probabilities, the tribunal prefers the evidence given by Mr Priestly to that given by the applicant, Ms Hart.  The tribunal considers that the evidence given by Mr Priestly is on this point more cogent and internally cohesive than that given by the applicant.  The applicant herself gave evidence that she immediately telephoned Mrs Leila Trainor on the evening of 21 May 2001.  Her reason for doing so was that she did not wish her to come into the situation without warning.  If, as the applicant tried to portray before the tribunal, there was no real concern over impending redundancy, the tribunal does not see why she would have been so anxious to phone Mrs Trainor that evening.  The tribunal is further supported in the inference that it draws from these circumstances by a letter dated 21 June 2001 written by Mr Priestly to the applicant and her response dated 11 July 2001 to him.  In the letter of 21 June 2001 Mr Priestly indicated that “protective notice” had been given to her on 21 May 2001.  The tribunal was interested to note that in the applicant’s response of 11 July 2001 this was not disputed.  The tribunal has taken notice of the applicant’s vigorous campaign to save Navan and the strong personal belief she held in the work of the Navan Centre.  If it was really the case that she had not been informed of an impending redundancy situation on 21 May 2001, the tribunal considers that on the balance of probabilities it is more likely than not that by her letter of 11 July 2001 to Mr Priestly, she would have vigorously disputed this assertion.  

7.	The tribunal was unable to hold that there was absolutely no prior notice of redundancy.  It would of course always have been preferable for this to have been in writing.  To do so is good industrial practice.  However, the tribunal does find that as soon as the Board of Directors realised that the Navan Centre was in such serious financial difficulties that it faced closure, it did notify the workforce of the position.

8.	The applicant also indicated that she felt the manner in which the news had been broken to her and her fellow employees on 4 June 2001 was insensitive.  There is no easy way to break bad news, and the tribunal has noted that despite the fact that Mr Priestly’s involvement with the Navan Centre was voluntary, he at least took the trouble to go down and break the news in person.  The tribunal is not able to make any finding as to the manner of breaking the news, even if it were relevant to do so, as the applicant did not put particulars of this alleged behaviour to Mr Priestly in cross-examination.

9.	It would have been preferable if the respondent’s board had maintained better communication with the employees between the period of 22 May 2001 and 4 June 2001.  The fact that they did not do so, created a false hope in the minds of the applicant and her fellow employees that everything was going to be all right and that the problem was over.  It is not surprising that she felt the blow all the more keenly after a period in which no information was given to her or her fellow employees.

10.	This is not a case in which the applicant was unfairly selected for redundancy as the entire workforce was made redundant.  Perhaps with the benefit of hindsight the manner in which the redundancy situation was handled and communication with the employees might have been better.  In the circumstances, was the dismissal of the applicant unfair on procedural grounds?  The tribunal in reaching its decision has considered the principles set out in the case of Williams –v- Compair Maxam Limited.  Bearing in mind that this is a case concerning unfair selection for redundancy, the only principle that could really be imported into these circumstances is whether the employers had given the maximum warning of impending redundancies.  It is important to remember that the position was fluid at that time and that the board were fighting to keep the Centre open.  The tribunal finds that the employees were informed of the situation on 21 May 2001.  There had been a similar fluidity and uncertainty in the circumstances of the Navan Centre funding in previous years.  What made this situation different?  It was only at the end of April that it became clear to Mr Priestly that the funding for the Centre was under extremely serious threat.  He convened a board meeting on 18 May 2001 and on 21 May 2001 informed the employees of the company.  Once the situation had crystallised, and he had taken the appropriate advice, the tribunal finds that Mr Priestly did give as much notice as possible of the impending redundancy situation.  It is undoubtedly the case, that no company can trade whilst insolvent.  

11.	Having found the reason for dismissal, a tribunal must then consider the provisions of Article 130(4) and this states as follows:

“Where the employer has fulfilled the requirements of paragraph (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) – 

(a)	depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and

(b)	shall be determined in accordance with equity and the substantial merits of the case.”

12.	In this very exceptional case, the tribunal finds that while there might have been a failure to consult with the employees between the period of 21 May 2001 and 4 June 2001, consultation would have been of no avail.  The business had to be closed to avoid trading whilst insolvent.  The tribunal is supported in reaching this view by the dictum of Lord Bridge in the case of Polkey –v- A E Dayton Services Limited (1998) ICR142 which says:-

“… it is quite a different matter if the tribunal is able to conclude that the employer himself, at the time of dismissal, acted reasonably in taking the view that, in the exceptional circumstances of a particular case, the procedural steps normally appropriate would have been futile, could not alter the decision to dismiss and therefore could be dispensed with.”

	In the exceptional circumstances of this case redundancy was inevitable and any reasonable employer faced with these circumstances could have decided not to consult with employees in this situation.  The decision to close the Navan Centre and make all the employees redundant was a decision taken in accordance with equity and the substantial merits of the case taking account of all the circumstances pertaining at that time.  

13.	The tribunal is unable to find that the respondent’s treatment of the applicant was such as to make her dismissal unfair on procedural grounds.  The parties agreed that the applicant was entitled to the following compensation:

Head of Damage					Amount

Redundancy Payment					£2,520.00

	Breach of Contract					£3,000.00

	Unpaid Wages						£  368.80

	Holiday Pay						£  768.00

	Total							£6,656.80

14.	This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Northern Ireland Order 1990.

15.	This decision has been given in extended form as the tribunal does not consider that a decision in summary form would be sufficient to explain its reasoning to the parties. 

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Date and place of hearing:  29 July 2002, Belfast

Date decision recorded in register and issued to parties: