Key redundancy ruling a huge relief for employers
The Court of Justice of the European Union (CJEU) yesterday ruled that UK employers only need to comply with collective redundancy consultation requirements if they are proposing to make 20 or more redundancies in a rolling 90 day period at a single establishment site. The total number of redundancies planned across the company is no longer the trigger.
The judgment by the Court reverses the decision in 2013 by the UK’s Employment Appeal Tribunal (EAT) in cases involving former employees of insolvent retailers Woolworths and Ethel Austin. In 2013, the EAT ruled that employers had a legal duty to collectively consult employees whenever they planned to make 20 or more redundancies within 90 days anywhere across their business, even if there were less than 20 redundancies at any single location.
As a result of the Woolworths EAT decision two years ago, employers have had to aggregate the number of proposed dismissals across their entire workforce which has proved extremely challenging for large employers with multiple sites. Instead of allowing local management to make decisions about redundancies on an individual site by site basis, employers have had to work out complex ‘joined up’ administrative processes to ensure there are no individual pockets of restructuring going on so that the ‘trigger figure’ of 20 redundancies is managed appropriately. Likewise, systems would also have been set up to ensure employee representation requirements were met, including the election of employee reps where Trade Unions or other employee forums were not already in place.
However, yesterday’s ruling by the CJEU changes all of this, which employment law expert, Christopher Mordue of Pinsent Masons, the law firm behind Out-Law.com, says is a “huge relief” for businesses.
Mordue went on to say:
“This is the end of an arduous legal battle which has caused confusion for UK businesses and could have led to compliance failures and millions of pounds of liabilities for UK employers.
"It is the best possible outcome for UK business – ending uncertainty and reversing a ruling which tore up the long established approach to collective consultation in the UK."
"The CJEU has now made absolutely clear that UK law legitimately limits the obligation to consult with unions or employee representatives only to cases where 20 or more redundancies are proposed at the same establishment. Today's decision will be especially welcomed by multi-site companies such as retailers, which would have been particularly at risk from significant additional costs and burdensome red tape if the duty to consult was confirmed for small-scale restructuring across several sites.”
International Workplace’s HR Consultant, Tar Tumber, also commented in wake of the ruling:
“This decision by the CJEU makes total sense - surely when an employer is trying to work out whether they need to consult for at least 30 days, they should only be looking at the planned redundancies in that one establishment, rather than be caught up in what is planned over a rolling 90 day period anywhere else, in any number of sites, elsewhere! So in the Woolworths case, the establishment would now be a store and if less than 20 positions were at risk of redundancy, then of course, appropriate and meaningful consultation would still need to take place, but the requirement for 30 days consultation would not kick in.”
“Whilst most businesses will welcome this decision, there is still a point of caution which is that what is or is not an ‘establishment’ will still largely depend on each case and consider whether each site has permanence and stability. I would also consider the employee’s contract and stated location and mobility clauses – if staff work between sites rather than being permanently assigned to one site, this may also mean added complications.”
If you require additional advice, our next Facilities Management Legal Update, taking place on 11 June 2015 will cover this issue plus a whole host of other key legislation changes across HR and employment law, health and safety, fire safety and the environment. Call us on +44 (0) 871 777 8881 to discuss further.