Mugford v Midland Bank Plc

Factual and Procedural Background

The Appellant commenced employment with Company A on 2nd February 1970 and was the manager of its branch at The City. In 1995, Company A planned a major restructuring resulting in approximately 3,000 redundancies, including around 858 managerial positions. The Appellant had progressed through the ranks and was a grade M94 manager, while the company desired a grade M93 in that role.

Company A recognized a trade union for collective bargaining and had a Security of Employment Agreement ("SEA") with the union, which set procedures for compulsory redundancies but did not require consultation with individual employees identified for redundancy.

In March 1995, Company A informed area managers, including the Appellant's area manager, about the restructuring and selection criteria for redundancy. Based on confidential performance reviews and assessments, the area manager recommended the Appellant for redundancy due to perceived insufficient capabilities.

In May 1995, the Appellant received a letter notifying him of potential redundancy with a termination date set for 30th September 1995. Subsequent meetings were held to discuss redeployment opportunities, and the Appellant involved his union in the matter. Formal notice of dismissal was given in July 1995, and an appeal after termination was unsuccessful.

The Industrial Tribunal found the dismissal was due to redundancy and considered the reasonableness of the dismissal under the relevant employment legislation. The Tribunal concluded that the dismissal was fair, noting that consultation obligations were met primarily through union consultation and that individual consultation was available but not actively pursued by the Appellant.

Legal Issues Presented

1. Whether the dismissal of the Appellant was fair under section 57(3) of the Employment Protection (Consolidation) Act 1978 (now section 98(4) of the Employment Rights Act 1996) in the context of redundancy.
2. Whether the employer was required to conduct individual consultation with the employee in addition to collective consultation with the recognized trade union.
3. The scope and adequacy of consultation obligations in redundancy dismissals, particularly regarding individual consultation prior to final redundancy decisions.

Arguments of the Parties

Appellant's Arguments

• The Tribunal's finding of fair dismissal was perverse because no individual consultation took place before the final decision to identify the Appellant for redundancy.
• The Tribunal erred in suggesting that consultation was available to the Appellant if he had sought it; the onus was on the employer to engage in consultation, not on the employee.

Respondent's Arguments

• There was no obligation to consult both the union and the individual employee where a recognized union existed and collective consultation had occurred.
• The Tribunal's conclusion that adequate consultation took place was permissible and consistent with statutory provisions.
• Even if consultation was inadequate, the dismissal would still be fair as proper consultation would not have altered the outcome.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first acknowledged the statutory framework requiring reasonableness in redundancy dismissals, including objective selection criteria, their reasonable application, consultation, and consideration of alternatives. The Tribunal had found no fault with the criteria or their application and accepted the employer’s reasonable efforts to find alternative employment for the Appellant.

The key contested issue was the adequacy of individual consultation. The Tribunal found no consultation between March and May 1995 and limited consultation thereafter, mostly focused on general banking matters rather than redundancy specifics. However, it concluded that consultation obligations were fulfilled primarily through collective union consultation, and individual consultation was available if the Appellant had pursued it.

The court reviewed relevant case law establishing that while consultation with a recognized union is important, it does not automatically discharge the employer’s duty to consider individual consultation. The court emphasized that consultation should normally occur before a final redundancy decision and provide employees an opportunity to influence the outcome.

Nonetheless, the court held that the statutory provisions do not impose an absolute requirement for individual consultation before final redundancy decisions. The Tribunal’s conclusion that the employer’s consultation was adequate in all circumstances was a permissible factual finding. The court rejected the Appellant’s argument that the employer bore the onus to initiate individual consultation, noting that the overall fairness must be assessed by the Tribunal on a factual basis.

Furthermore, the court recognized the "Polkey" exception allowing an employer to avoid consultation if it would have been futile, but found that this was not a determinative issue given the facts. The court also found that even if consultation was inadequate, the dismissal would still be fair as consultation would not have changed the outcome.

Holding and Implications

The appeal is DISMISSED.

The court upheld the Tribunal’s finding that the dismissal was fair despite limited individual consultation prior to the redundancy decision. The ruling confirms that while consultation is a significant factor in redundancy fairness, statutory provisions allow flexibility in how consultation is conducted, especially where collective consultation with a recognized union exists. The decision emphasizes the factual nature of fairness assessments in redundancy dismissals and does not establish a rigid legal requirement for individual consultation before final redundancy decisions. The direct effect is that the Appellant’s dismissal stands, and no new precedent altering consultation obligations was created.