In this eNewsletter:
 EMPU Contacts  Alan Masson Direct Dial: Email:
|
|
Changes to Collective Redundancy Consultations What has changed?This decision impacts on the already substantial requirements upon employers to engage in a collective consultation exercise with employees’ representatives, when plant closures or collective redundancies are in prospect. There will now also be a need for employers to consult with the employee representatives about the reasons behind any proposal to close a workplace and/or to make twenty or more employees redundant. BackgroundThe Employment Tribunal (ET) recently found that UK Coal Mining Limited had failed to consult properly with the trade unions representing over 300 employees, who had been made redundant as a result of the closure of Ellington Colliery in Northumberland in 2006. The claimants, the National Union of Mineworkers (NUM) and the British Association of Colliery Management (BACM), were awarded protective awards amounting to 90 days gross pay per affected employee, the maximum award possible. UK Coal Mining Limited unsuccessfully appealed against this decision. Of more significance, however, was a successful cross-appeal by the NUM and the BACM. This was against the ET’s finding that there was no obligation on the employer to consult over the closure of the mine itself. It is the success of this cross-appeal which has altered previously established authority which, although requiring an employer to inform the employee’s representatives of why redundancies were to take place, had not required them to consult over the decision to close a business and/or make employees redundant. The applicable lawThe statutory provisions relating to the procedure for handling collective redundancies can be found in the Trade Union and Labour Relations (Consolidation) Act 1992 (‘the 1992 Act’). Section 188 of this Act provides that an employer proposing to make collective redundancies (twenty or more employees to be made redundant at one establishment within a period of ninety days or less) is required to consult in advance with representatives of the affected employees. During the consultation process the employer must disclose such factors as the reasons for the proposed redundancies, the proposed method of selecting the employees who may be dismissed, the proposed method of carrying out the dismissals and the proposed method of calculating redundancy payments. When considering the extent of the consultation process required, it is important to note that the 1992 Act does not match the wording of the relevant European Directive (98/59/EC), which it seeks to implement. The crucial distinction is that whereas the directive requires consultation when dismissals are ‘contemplated’, the 1992 Act merely requires consultation when dismissals are ‘proposed’. This has led to a line of UK case law which has determined that the word ‘proposed’ indicates an obligation to consult at a later stage than is required by ‘contemplated’. As a result, the accepted view has been that, whilst there is an obligation to consult over the redundancies in general terms, there is no obligation to consult over the decision to close a business or workplace and/or to make redundancies. The decision of the employment appeal tribunalThis position in law was the subject matter of the successful cross-appeal by NUM and the BACM. They submitted that this position could no longer apply in the light of an amendment made to section 188 of the 1992 Act by the Trade Union Reform and Employment Rights Act 1993. It was argued that this change obliged the employer to consult, not merely ‘about the dismissals’ but ‘about ways of avoiding dismissals’. The Employment Appeal Tribunal (EAT) were persuaded by this argument. They found that the scope of the consultation obligation had been significantly widened by this change and that it should now extend to require consultation about the reasons behind the proposed closure or the need to make redundancies. The EAT was further persuaded by the argument that the duty to consult under section 188 of the 1992 Act should be no more limited than that contained in “The Information and Consultation of Employees Regulations 2004”. These regulations require consultation, in certain circumstances, about such matters as, the probable development of employment, measures likely to pose a threat to employment and decisions likely to lead to substantial changes in work organisation or contractual relations. Although the 2004 regulations do not apply once section 188 of the 1992 Act is triggered, the EAT found that the duty to consult under the 1992 Act should be no less broad than that contained in the 2004 Regulations. In coming to its decision the Employment Appeal Tribunal specifically stated that it did not substitute the wording of the EC Directive (‘contemplated’) in place of that contained in the 1992 Act (‘proposed’). Instead, it seemed persuaded by the argument that once redundancies are fixed as a clear likelihood, there can never be genuine consultation about ‘ways of avoiding dismissals’, if the decision itself, whether to close the business or workplace and/or to make redundancies, is not itself open for discussion.
The implications of the decisionSome commentators have rightly pointed out that employee representatives may use the new requirement to access critical business information in order to enable them to challenge the rationale for closures or redundancies. It will no longer simply be a case of saying that a plant will close or that redundancies are required. The collective consultation process will now involve justifying that intention and the employer may have to put forward a detailed defence of the business case for closure or downsizing, backed up by data. It is therefore of the utmost importance that the reasons given for the need for closure or redundancy are the right ones and where necessary, that they can be backed up by evidence. Failure to do so could result in protective awards being made to the affected employees, which as they can be for up to 90 days gross pay per affected employee, could equate to a quarter of the annual payroll.
Further informationFor further information, please contact Alan Masson, Murray McCall or your usual contact in the Employment Team. |
