13th June 2013

INFORMATION

UPDATE

 Issue No.  2013/12

 Sentient
              

 

Redundancy Consultation – Landmark decision

We don’t normally send out two Information Updates in one week but sometimes it is necessary to get new information to you quickly.

For decades we have all known that when considering whether collective and legally required redundancy consultation is required it has been the number affected by the redundancy at a specific location that has been the deciding factor.  Well – not any more it isn't.

In a recent ruling the EAT have reached a landmark decision regarding the words “at one establishment” contained within the Trade Union and Labour Relations (Consolidation) Act 1992.

The case concerns some former employees of Woolworths made claims for protective awards.  They argued that the stores should be aggregated to constitute a single establishment for the purpose of collective redundancies. The EAT has agreed with them ruled that the words “at one establishment” should now be disregarded for the purpose of any collective redundancies involving more than 20 employees.

The original Tribunal had held that the statutory duty to consult collectively did not apply for the stores which employed less than 20 employees, due to the fact that each store was a separate “establishment” and less than 20 were affected.

The Implications are massive.

So, the situation now is as follows:- if it is proposed that 20 or more employees in a single business, irrespective of how that business is split up into separate sites, are to be made redundant within a 90 day period, then it will be overall numbers alone that will trigger collective consultation obligations.  Multi-site operations with small numbers of redundancies  per site will now have to aggregate them to determine what form of consultation is required.

If this decision is not appealed this will significantly alter the current legal position.

It is worth remembering that the penalties for failure to collectively consult are significant with a punitive award of up to 90 days gross pay per affected employee potentially available AND when setting the level Tribunals have to start at 90 days and be persuaded downwards!! 

Individual consultation

If the numbers affected are less than 20 then employers are not off the hook completely with regards to consultation as individuals are expected to be consulted with irrespective of the requirements of collective consultation. In practice it would be rare for Tribunals to be persuaded that individual consultation was meaningful and genuine if less than 14 days consultation, and in many cases longer, was provided.

Whilst it is a bit depressing to crank up the news on how to handle redundancy situations at a time when the call for advice on this topic has eased from what it was a few years ago, the significance of the decision is one that all multi-site businesses must react to. The failure to respond could be extremely expensive.

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The advice and comment in this update is not meant to be an authoritative statement of law. The articles and summaries should not be applied to any specific set of facts and circumstances without seeking further advice. Whilst every care is taken to ensure that the content is correct Sentient cannot accept responsibility for the accuracy of statements made nor the result of any actions taken by individuals after reading such.

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