Joe O’Hara, of Thompsons Trade Union Law Group, looks at the consultation obligations on employers when making collective redundancies and what to do if they fail to honour them.
The duty to consult, set out in section 188 of the 1992 Trade Union and Labour Relations (Consolidation) Act (TULRCA), is triggered when an employer proposes to dismiss as redundant 20 or more employees at one establishment within 90 days or less.
Collective consultation
The consultation has to begin “in good time” but, if the employer is proposing to dismiss 100 or more employees, it has to start at least 90 days before the notices of dismissal expire. If between 20 and 99, then at least 30 days beforehand.
Following the decision of the European Court in the case of Junk -v- Kuhnel, it is clear that the statutory consultation process must be completed before the employer issues any notices of dismissal.
What constitutes “in good time” is a question of fact and degree for a tribunal to decide. In Leicestershire County Council -v- UNISON, a proposal to dismiss a month before the decision to dismiss triggered the start date for consultations.
In Amicus -v- Nissan, the appeal tribunal said that, in deciding the issue, a number of factors have to be taken into account including the numbers of staff and unions involved; subjects to be discussed; and number of meetings likely to be required.
Employee representatives
If the employer recognises a trade union in respect of the workers being considered for redundancy, they have to consult with the union reps (even for non-members).
If an employer does not recognise a union in respect of the employees at risk, they must invite them to elect representatives. So, in circumstances where some employees fall outside a recognition agreement, the employer may have to consult union reps and elected employee reps. Union activists in the relevant group can, however, stand for election as employee reps.
Number of redundancies
The duty to consult still applies even if the employer proposes to make 20 or more employees redundant, but ends up only dismissing, say, 15.
In Optare Group Ltd -v- TGWU, the appeal tribunal held that volunteers who were accepted for redundancy should be included within the number of employees whom the company proposed to dismiss, bringing the numbers to over 20.
And in Hardy -v- Tourism South East, although the employer estimated that only 12 out of 26 staff would be made redundant (the rest were to be redeployed), the appeal tribunal said that even those to be redeployed had to be included in the numbers the employer was proposing to dismiss.
If the employer can show that the proposed redundancies have been deferred from a previous consultation, however, they do not have to consult again.
In Vauxhall Motors Ltd -v- TGWU, the employer consulted the union about proposed collective redundancies in February 2003. The redundancies were then deferred but, in September 2004, the employer decided that they were needed after all but did not reopen consultations with the union.
The union claimed this was a breach of the consultation obligations but the appeal tribunal held it was not necessary to consult again when the consultation “deals with the same employees and the same prospective redundancies.” New consultation is only required “when a fresh proposal of redundancies arises”.
Purpose of the consultation
Section 188(2) TULRCA states that, for consultation to be meaningful and genuine, employers must enter into it “with a view to reaching agreement with the appropriate representatives”.
That means they have to consult on how they propose to:
• avoid dismissals
• reduce the number of employees to be dismissed
• mitigate the consequences of the dismissals.
Consulting just on the selection method is not enough. Discussions should cover whether the dismissals, or the number planned, are necessary at all. They should also cover all the information an employer is under a duty to give to the union, including the reasons for the redundancies or closure.
It is also arguable that the obligation to consult over the reason for redundancies applies not just in situations when the plant or factory closes but also when there is a reorganisation that results in dismissals with new contracts.
It is not possible for an employer to avoid consultation by saying it would be futile. Fair consultation means that reps have a proper chance to understand the matters under consultation and to express views which the employer must then genuinely consider.
Providing information
Representatives must be given written information about:
• the reasons for the employer’s proposals
• the numbers and descriptions of employees at risk
• the total number of employees of any such description employed by the employer at the relevant establishment
• the proposed method of selection
• the proposed method of carrying out the dismissals, with due regard to any agreed procedure, including the period over which they are to take effect
and
• the proposed method of calculating the amount of any non-statutory redundancy payments.
The information must be sufficient for proper consultation. For example, it is not enough to state that the method of selecting employees “is to be determined”.
The information must be provided by the employer to the representatives by hand or by post to an address provided to them. If the trade union is recognised, the information must be sent to the union’s head or main office.
The reps must also have access to the affected employees and facilities to meet with them.
Special circumstances defence
Employers can only avoid the duty to consult if they can show that it was not reasonably practical and that they were doing all they could to comply.
In Clarks of Hove Ltd -v- Bakers Union, the Court of Appeal held that there must be a sudden disaster, whether physical or financial, that makes it necessary for an employer to close down the business. Insolvency by itself does not count. Tribunals will have little sympathy for an employer who is aware of the financial difficulties facing their business but does not consult.
Other examples that do not count as special circumstances include:
• an employer’s belief that they could not genuinely consult on ways of avoiding redundancies in circumstances where they entered into genuine consultation on the other specified subjects
• shedding employees to make the sale of the business more attractive during a receivership, the failure to find a buyer and a lack of orders.
Protective awards
If an employer fails to comply with the duty to consult, the trade union (if recognised) must lodge a tribunal claim for a protective award within three months of the last dismissal taking effect on behalf of employees for whom it is recognised.
If there is no recognised trade union, and appropriate representatives have been elected, they bring the claim. Otherwise it is down to the individual employees.
If the tribunal finds against the employer, it will make a declaration to that effect and make a “protective” award. This is an order to the employer to pay remuneration to each employee for the “protected” period, which begins with the date on which the first dismissal takes effect, or the date of the protective award, whichever is earlier.
The protected period is of such length as the tribunal considers just and equitable in all the circumstances having regard to the seriousness of the employer’s default.
In Susie Radin Ltd -v- GMB and ors the appeal tribunal held that, if there was no consultation, tribunals should make the maximum award of 90 days unless there were reasons to justify a lower award.
When making an award, tribunals must take the following considerations into account:
• the purpose of the award – which is to punish the employer, not to compensate the employees for loss as a consequence of the employer’s breach of duty to consult
• the seriousness of the employer’s default (in a range from a technical to a complete failure to consult)
• whether the employer deliberately failed to consult
• whether the employer had access to legal advice.
Note that the maximum length of the protected period is 90 days, regardless of the numbers involved. The amount of a protective award is a week’s pay per week of the protected period, pro rata, at the normal rate of pay.