Coal Mining Ltd v NUM and BACM

The law says that employers have to consult with unions in the event of redundancies and provide them with certain information. In UK Coal Mining Ltd v NUM and BACM, however, the Employment Appeal Tribunal (EAT) has gone much further by saying that employers now have to consult over the reasons for the closure of a workplace and not just the dismissals themselves.

Basic facts

Following a major flood, the company met with the two unions on 26 January 2005 to tell them that it would have to close Ellington pit in Northumberland for economic and safety reasons.

It said that consultation on redundancies would start immediately, but that 90 days’ notice would not be required because of “exceptional circumstances”. The following day it sent out formal letters under section 188 of the Trade Union and Labour Relations Consolidation Act (TULRCA) 1992.

Further meetings with the two unions followed in January and February, but the company still refused to share any meaningful information with them or consult on the proposed closure. It also refused to release copies of any reports detailing the need to close the mine for alleged safety reasons. It then told them on 25 February that 158 men would be made compulsorily redundant the following day.

The union complained that the company had failed to comply with its obligations under section 188 and applied for a protective award under section 189.

Relevant law

Section 188 of TULRCA requires employers to consult with union representatives at least 90 days before notices of dismissal are given to the workforce, if 100 or more are to be made redundant.

Employers are also required to consult over ways of avoiding the dismissals, among other things, “with a view to reaching agreement with the appropriate representatives.” They also have to give the reasons for the proposals, and other information, in writing to the union.

If a union makes a complaint that the employer has not complied, the onus is on the employer to show there were “special circumstances”, which made it not “reasonably practicable”, and that they took all reasonably practicable steps to comply.

Tribunal decision

Although the tribunal agreed with the company that it did not have to consult over the closure itself (as opposed to the dismissals), it said that it was required to give at least some indication of the reason for the closure decision. And that this should be true and given in good faith. Otherwise, “the whole purpose of the consultation process would be subverted.”

In this case, it said that the alleged (safety) reason given by the company for closure was deliberately misleading and a breach of the law. Nor could it rely on the “special circumstances” exception because it could easily have given the true (economic) reason for the closure.

EAT decision

The EAT agreed with the tribunal that the company had deliberately given a false reason for the pit closure and therefore had not complied with its obligations under section 188. It also agreed that the company could not rely on the “special circumstances” exception.

However, it disagreed with the tribunal’s conclusion that there was no obligation on the company to consult over the closure itself. Instead, it said that “the obligation to consult over avoiding the proposed redundancies inevitably involves engaging with the reasons for the dismissals, and that in turn requires consultation over the reasons for the closure. Strictly, of course, it is the proposed dismissals that are the subject of consultation, and not the closure itself. [But] where closure and dismissals are inextricably interlinked, the duty to consult over the reasons arises.”

It concluded therefore that the 1993 ruling in R v British Coal and Secretary of State for Trade and Industry ex parte Vardy which said that employers do not need to consult over closure of a work place was no longer good law. This case was decided when section 188 only required consultation “about the dismissals”, but has now been amended to include a requirement to consult about ways of avoiding dismissals in line with a European directive on collective redundancies.

Comment

This is an extremely important decision, representing a major advance in the law. For the first time, unions have the right to be consulted about the reasons why redundancies have been declared (at least in site closure cases).

As the EAT pointed out, the Information and Consultation of Employees Regulations 2004 require consultation over the undertaking’s economic situation. It would absurd if that obligation did not apply under section 188 at the very time where job losses were envisaged.

In site closure cases, where the reason for the redundancies is necessarily linked to the reasons for the closure, the employer will have to consult, with a view to reaching agreement, about the reasons for the closure. This principle may well apply in other redundancy situations.