5th May 2015

INFORMATION UPDATE

 Issue No.  2015/07

 Sentient
              

 

Redundancy Consultation – Landmark Decision

You can be forgiven if you don’t remember our Information Update 2013/12 (13th June 2013) regarding the Landmark decision of the Employment Appeal Tribunal (EAT) on Redundancy Consultation.

By way of reminder, it concerned the cases involving former employees of Woolworths, seeking protective awards for failing to consult in accordance with the collective consultation requirements.

Prior to this decision, it was established law that the trigger to determine whether collective and legally required redundancy consultation is required was the number of employees affected by the redundancy at a specific location.

The employees argued that the stores should be aggregated to constitute a single “establishment” for the purpose of collective redundancies.  The original Tribunal decision was 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 EAT overturned the decision and agreed that the words “at one establishment” contained within the Trade Union and Labour Relations (Consolidation) Act 1992 should now be disregarded for the purpose of any collective redundancies involving more than 20 employees.

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!! 

The implications of the above decision were massive and consequently, an appeal was lodged at the Court of Appeal.  The Court of Appeal made a reference to the European Court of Justice who have now delivered their judgment.

The ECJ held that 'establishment', in the collective redundancy legislation, refers to an individual workplace (or, more accurately, the entity to which the workers made redundant are assigned to carry out their duties), not to the employer as a whole.

Consequently when establishing the number of employees to determine whether collective consultation applies (i.e. when contemplating 20+ redundancies in a period of 90 days), Woolworths was right to count each store as a separate 'establishment'; therefore it did not need to engage in collective consultation at a store with fewer than 20 employees.

The ECJ has formally referred the case back to the Court of Appeal, but the Court of Appeal's decision is likely to be a formality (reversing the decision of the EAT) and restoring us back to where we were before!

In summary, consultation timescales as set by legislation are as follows:

Number of employees at one establishment proposed to be dismissed as redundant. **

Minimum period of consultation before the first dismissal takes place.

100 or more within 90 days

45 days

20 or more within 90 days

30 days

Less than 20

None *


*          None required by law but it is recommended that at least 14 days consultation be given on an individual basis.

**        The 20/100 should include redeployments (where there is no contractual mobility clause) and volunteers (providing they are volunteering for dismissal on grounds of redundancy).  The 20/100 does not need to include fixed term workers where the contract is coming to a natural end.

Individual Consultation

Where Collective Consultation does not apply (i.e. where fewer than 20 employees are at risk of redundancy at one establishment) there is still a requirement to act fairly in dismissing any employee on the grounds of redundancy.  Whilst there is no minimum time scale in which to consult with those affected, 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.

Remember: an employee (subject to qualifying for the right) has the right not to be unfairly dismissed and therefore it is necessary for an employer to be able to demonstrate a genuine redundancy situation and that it acted fairly in dismissing the employee on the grounds of redundancy by having a meaningful and genuine consultation and selection process. 

Employers should obtain professional advice before dismissing an employee in these circumstances.  Employers with a Legal Expenses Insurance policy could jeopardise their cover if advice is not sought from the approved helpline.


 

 

 

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