The Employment Appeal Tribunal (EAT) has issued a decision which represents a significant extension of the duty to carry out collective consultation in redundancy cases.
Where an employer is considering making 20 or more redundancies, there is a duty to provide information, and consult with, either trade unions (where there is a recognised trade union) or with employee representatives.
UK law stipulates that this duty applies where at least 20 redundancies are contemplated at one establishment.
This case was brought by the USDAW union on behalf of former employees of Woolworths, before it became insolvent. If there were fewer than 20 employees at one store, Woolworths had not carried out collective consultation, treating each store as one establishment.
In a bold decision, judges at the EAT have now decided that UK law did not accord with the European Directive from which these consultation laws emanate. They decided that the wording in the UK legislation regarding one establishment should effectively be ignored. That meant that a total of over 3,000 former Woolworths employees became entitled to something called a protective award – up to thirteen weeks salary per employee.
What does this mean for employers?
Any Company that thinks it may have to make 20 or more people redundant (whatever the final number is likely to be, and even if voluntary severance is being offered) is advised to ensure that it has carried out collective consultation, however staff are dispersed across the business and in whatever units. If the company does not have a recognised trade union, staff will have to be invited to elect employee representatives.
Staff working at different sites facing redundancy should be counted up in total to see if the threshold of 20 is crossed.
Note that the government recently made changes to reduce the period of consultation from 90 days to 45 days where 100 more redundancies are proposed. The consultation period for a total of 20-99 redundancies remains at thirty days.