Counting the cost

Optare Group v TGWU

Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 says that employers who intend to make 20 or more employees redundant within 90 days must consult their trade union representatives.

In Optare Group v TGWU, the Employment Appeal Tribunal (EAT) said that the collective consultation provisions were triggered, even if the 20 redundant employees included volunteers.

Basic facts

The company told the TGWU in March 2006 that it would be making 30 redundancies overall at its Leeds and Rotherham sites, but only 19 in total at Leeds.

In line with a local informal agreement, the company asked for volunteers to come forward. In April, it decided to accept the three who had volunteered and it chose another 17 for compulsory redundancy.

The union offered the view that the statutory obligation to consult had therefore been triggered. Not so, said the company, as the three volunteers should not be included. The union disagreed and applied to the tribunal for a protective award.

Tribunal decision

The tribunal agreed with the union. It said that the fact that the three men had volunteered to be made redundant was irrelevant. They would not have left had the company not asked for volunteers to come forward.

“The only reason they volunteered is because they had been invited to do so when the respondent followed its obligations to try to mitigate the impact of the redundancies. Whilst we accept that neither (sic) of these men would be likely to have been selected for compulsory redundancy, with respect to the respondent we do not think that is the issue. … The issue is not whether they themselves would have been selected had they not volunteered, but whether there was any prospect of the men asking to leave if there had been no redundancy declared of which we have had no evidence.”

Grounds of appeal

The company appealed that decision, arguing among other things that the tribunal had failed to apply the correct test, which was one of causation. By ignoring the reason that one of the volunteers gave for leaving – namely the death of his father along with health problems – it had erred in law by concluding that he had been dismissed. He had in fact volunteered for personal reasons, not because he might be made compulsorily redundant.

And the company also argued that the tribunal’s decision was perverse because at least one of the men would have accepted a similar financial package, even if there had been no redundancy exercise.

EAT decision

The EAT decided that the tribunal had focused on the correct issue in the case, which was to identify the cause of the termination of the volunteers’ employment. It concluded that they had volunteered to be made redundant as part of the redundancy exercise, as opposed to agreeing to “a consensual termination of their employment which might have a knock on effect on the redundancy exercise.”

The fact that one of the men might have left, “even in the absence of a redundancy situation, is, in our judgment, irrelevant. It would have been quite different had there been evidence that he was anxious to leave and had expressed this wish independently of, or prior to, a redundancy situation arising.

That would have provided a potential basis for concluding that the eventual termination was consensual rather than [Mr Townend] volunteering to be dismissed. But that was not the case, nor was there any evidence of that.”

The tribunal had therefore been right to conclude that there was no evidence that any of the men would have asked to leave if the company had not announced its redundancy package, and should be included in the overall numbers.