Williams & Ors v Compair Maxam Ltd

Factual and Procedural Background

A number of employees of Company A were dismissed on grounds of redundancy on 31st January 1981. Five employees brought complaints of unfair dismissal to an Industrial Tribunal. The Tribunal heard all five cases together and, by majority, dismissed all claims. Four of these employees appealed to a higher Tribunal.

Company A, employing approximately 200 workers, experienced a significant decline in orders during 1980, resulting in financial losses. Initial responses included voluntary redundancies and short-time working. A new works manager was appointed in December 1980 with instructions to reorganise the business and restore financial stability. This involved reducing managerial staff and having managers select employees to retain based on viability criteria.

On 16th January 1981, a meeting with the recognised union (Union APEX) was held, where it was agreed to seek volunteers for redundancy, but the union was not informed of the method for selecting additional redundancies. Only seven employees volunteered. Departmental managers then compiled lists of employees to retain or dismiss, applying subjective criteria without consulting the union.

The union was informed on 28th January that insufficient volunteers had come forward and that remaining redundancies would be notified imminently. The union requested the list of those selected, which was refused. Dismissals were effected on 29th January, with statutory notice and enhanced redundancy payments.

The union applied for a protective award under the Employment Protection Act 1975, which was later granted by a separate Tribunal.

Legal Issues Presented

1. Whether the Industrial Tribunal properly applied the legal test under Section 57(3) of the Employment Protection (Consolidation) Act 1978 regarding the fairness of dismissal for redundancy.
2. Whether the employer adopted and applied reasonable and objective criteria for selecting employees for redundancy.
3. Whether the failure to consult the recognised union adequately affected the fairness of the dismissals.
4. Whether the Industrial Tribunal’s decision was perverse in law, justifying intervention on appeal.

Arguments of the Parties

Appellants' Arguments

• There was insufficient evidence to justify the Industrial Tribunal’s finding that proper criteria for redundancy selection had been adopted or applied.
• The employer’s failure to consult the union was not given proper weight by the Tribunal.
• The Tribunal’s decision was perverse and legally wrong.

Respondent's Arguments

• The Industrial Tribunal correctly applied the law, and its factual findings on fairness are binding.
• The appeal Tribunal should not interfere with the factual findings of the Industrial Tribunal.
• No substantive challenge to the Industrial Tribunal’s merits was made beyond arguing misdirection in law.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Greig v. Sir Alfred McAlpine & Son (Northern) Ltd. [1979] IRLR 372	Employers must adopt and fairly apply reasonable criteria for redundancy selection; burden of proof on employer under former law.	The court held that while the burden of proof had shifted under later legislation, the case illustrated principles of good industrial practice relevant to assessing fairness.
Hollister v. The National Farmers' Union [1979] ICR 542	Failure to consult union does not necessarily render dismissal unfair; fairness is a question of fact for the Tribunal.	The court affirmed that consultation is important but not an absolute legal requirement for fairness in dismissal.
Bailey v. B.P. Oil Kent Refinery Ltd [1980] ICR 642	Fairness of dismissal is a question of fact for the Industrial Tribunal.	The court reinforced the principle that appellate interference is limited to errors of law, not disagreements over fact.
UCATT v. Brain [1981] ICR 54	Similar to Bailey; confirms the limited scope of appellate review on fairness findings.	Used to support deference to Industrial Tribunal factual findings on fairness.
London Transport Executive v. Clarke [1981] ICR 355	Standard for perversity: a decision is perverse only if no reasonable tribunal properly directing itself could have reached it.	Outlined the narrow grounds on which appellate courts may intervene for perversity.
Edward v. Bairstow [1956] AC 14	Clarifies the legal meaning of perversity in appellate review.	Reinforced that appellate intervention requires the decision to be plainly wrong beyond reasonable disagreement.

Court's Reasoning and Analysis

The court emphasised that under the amended Section 57(3) of the Employment Protection (Consolidation) Act 1978, the question of fairness in dismissal for redundancy is whether the employer acted reasonably in treating redundancy as a sufficient reason for dismissal, judged in accordance with equity and substantial merits.

The court explained that the Industrial Tribunal’s role is to determine if the dismissal falls within the range of conduct that a reasonable employer could adopt, not whether it would have made the same decision. The Tribunal must be satisfied that the employer acted reasonably in selecting the particular employees dismissed.

Drawing on industrial relations practice and statutory provisions, the court identified broad principles of good industrial practice for redundancy dismissals involving unionised employees: early warning, consultation with the union on selection criteria, objective and fair application of criteria, consideration of union representations, and exploring alternative employment.

The court noted that these principles are supported by statute (Employment Protection Act 1975) and the Code of Practice under that Act, which, while not legally binding rules, are relevant standards for assessing fairness.

The court found that, except for general warning, none of these principles were observed in the case. There was no consultation on selection criteria or method, no objective criteria were applied, and no list of those selected was shared with the union. The subjective selection by managers without objective standards and consultation was insufficient to satisfy the legal test of fairness.

The court further held that the Industrial Tribunal’s acceptance of the employer’s subjective criteria and speculation that the same results would have occurred even with proper consultation amounted to a possible misdirection in law. The Tribunal failed to properly consider whether the applicants were fairly selected.

The failure to consider alternative employment and the absence of consultation were also unreasonable. The court concluded that the Industrial Tribunal’s decision was perverse, as no reasonable tribunal properly directing itself could have reached that conclusion.

However, the court cautioned that the principles stated are standards of behaviour reflecting current industrial relations practice and are not immutable legal rules. Future cases must be considered in context, and only decisions that plainly violate accepted standards warrant intervention for perversity.

Holding and Implications

The court ALLOWED THE APPEAL, substituting a finding that the four appellants were unfairly dismissed. The case was remitted to a differently constituted Industrial Tribunal for assessment of compensation.

The direct effect is to overturn the majority decision of the original Industrial Tribunal and establish unfair dismissal in this case. The court did not set new legal principles but clarified the application of existing law and good industrial practice standards in redundancy dismissals involving unionised employees. The decision reinforces the necessity of consultation, objective criteria, and fair selection procedures as part of reasonable employer conduct.