In what looks very likely to be a significant change to the rules on collective redundancy consultation, it has been reported that a decision of the Employment Appeal Tribunal overhauls the current approach to deciding whether 20 or more employees at an 'establishment' are at risk of redundancy.
In brief, the relevant law is found in section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), which provides that where an employer is proposing to dismiss as redundant 20 or more employees at one "establishment" within a period of 90 days or less, the employer must enter into collective consultation with employee representatives. Consultation must last for either 45 days (if the employer proposes to dismiss 100 or more employees) or 30 days (if the employer proposes to dismiss 20-99 employees).
The issue in this case arose when employees across Woolworths' stores were made redundant on the insolvency of the company. Following the conventional approach for determining "establishment" for the purposes of collective consultation, employees who worked in shops at which fewer than 20 employees were employed were not included in collective consultation.
Last Thursday, the Employment Appeal Tribunal (EAT) decided that approach was incorrect.
There is no written judgment from the EAT available as yet, and this is not expected for some weeks.
However, assuming that the judgment is in line with Press reports, it seems that:
- the words “at one establishment” in section 188 of TULRCA must be disregarded by employment tribunals, and
- collective consultation requirements will be triggered once it is proposed that 20 or more employees across a single organisation are to be made redundant. The fact that the employees may be dispersed across several different geographic locations will not be relevant.
Please note that the detailed position remains unknown until the written judgment of the EAT is available – at which point we will provide an update.
In the meantime, employers who are about to embark on, or who are in the midst of, a collective redundancy exercise should note that it is likely that:
- there is an increased risk that redundancy exercises come within the scope of TULRCA because 20 or more employees may be covered more easily
- the length of collective redundancy exercises may be affected, as the duration of the exercise may increase from 30 to 45 days.
Please note also that s188 TULRCA applies to any dismissals where the reason for dismissal is unconnected to the individual employee. Another common example is on group dismissal and re-engagement for the purposes of changing terms and conditions – and this decision would also apply in these circumstances.