EAT Clarifies Collective Redundancy Consultation Obligations

David Reid
Director
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In a recent case, the Employment Appeal Tribunal (EAT) provided clarification on when a dismissal is proposed for the purpose of determining whether collective consultation obligations apply.

The Obligation to Collectively Consult

The law currently requires employers to collectively consult with representatives of affected employees where it is proposing to dismiss 20 or more employees within a period of 90 days or less by reason of redundancy. It is worth bearing in mind that, for collective consultation purposes, the definition of “redundancy” is wider than just where there is a reduction in the employer’s need for employees to do work of a particular kind, or a business closure; it can also, at least for the time being, cover dismissals proposed in connection with proposed changes to terms and conditions.

Where an employer is proposing to dismiss 20 or more employees within a period of 90 days or less by reason of redundancy, an employer must also notify the Secretary of State (for Business, Innovation and Skills) using a specific HR1 form. A failure to collectively consult with representatives of affected employees can give rise to employee relations issues and can expose the employer to potential costly employment tribunal claims.

Over the years, there has been debate around the definition of ‘proposing to dismiss’ and in particular, whether there is an obligation to look simply at the employer’s proposals for the future, or whether consideration had to also be given to the number of dismissals that were subsequently proposed or effected

The Findings of the EAT

In the recent case, the EAT considered this question further and clarified that when determining whether an employer is proposing to dismiss 20 or more employees within a period of 90 days, the focus should be on what the employer contemplated or planned at the time for the future. The EAT expressly concluded that whether a dismissal is proposed is therefore a ‘forward looking’ question based on the employer’s plans at the relevant time.  It decided that the focus should not be on how many dismissals were later ‘effected’ or considered retrospectively.

Practical Implications of the Case

One of the practical implications of this clarification by the EAT is that employers will not be obliged to take into account any previous redundancies within the 90 days when determining whether they meet the threshold for collective consultation.  The relevant legislation makes it clear that at the time of making the proposals, no account needs to be taken of employees who are already within such a consultation process.

Whilst this decision undoubtedly clarifies the position on when an employer is ‘proposing to dismiss’ an employee by reason of redundancy and may, in some cases, limit the occasions where collective consultation obligations apply, it is important to note that employers cannot deliberately attempt to escape these obligations by staggering dismissals.

The EAT in this case made it clear that an employment tribunal would place particular focus on the employer’s intentions, based on the facts at the time and that the tribunal will be alert to situations where an employer has deliberately attempted to avoid their collective consultation obligations by denying that dismissals were being ‘proposed’ at a certain time.

As mentioned above, there can be notable legal repercussions for employers failing to collectively consult with employees. A failure to comply with the collective consultation obligations can result in an employment tribunal making a maximum award of up to 90 days’ gross pay for each dismissed employee.  Failure to notify the Secretary of State where an employer is proposing to dismiss the requisite number of employees within the specified time period (by way of submission of the HR1 form) is also criminal offence for which an employer can be ordered to pay an unlimited fine.

Given the complexity of the obligations and potential legal repercussions of failing to collectively consult with employees when “proposing to dismiss”, we recommend that you seek legal advice from Just Employment Law as soon as you start to contemplate making any redundancies. The earlier that we become involved in your process, the more assistance we can provide in helping you meet your legal obligations.

If you have any questions about the EAT’s decision in this case or collective consultation obligations more generally, or if we can provide support or assistance on any other employment law matter, please do not hesitate to contact a member of the team on 0141 331 5150.

Topics: collective consultation, Redundancy