Section 188 of the Trade Union and Labour Relations Consolidation Act (TULRCA)states that the collective consultation obligations are triggered if an employer makes 20 or more employees redundant within 90 days or less. In UCU v University of Stirling, the Court of Appeal held that the termination of fixed term contracts did not count as a redundancy and therefore did not trigger the collective consultation obligations.
The university regularly engaged employees on fixed term contracts (FTCs) to carry out research funded by third parties; to deliver specific projects; and to provide maternity and sick leave cover, among other things.
When the university failed to renew a number of FTCs, the UCU applied for a protective award. At a pre hearing review, the tribunal was asked to decide whether the expiry of the FTCs of four specific employees could amount to a dismissal by reason of redundancy. This would then trigger the collective consultation requirements under section 188.
The university argued that the non-renewal of a fixed term contract was personal to those individuals and therefore did not satisfy section 195 of TULRCA which defines redundancy for the purpose of collective consultation as: “… dismissal … for a reason not related to the individual concerned …"
Tribunal and EAT decisions
The tribunal held that, as the expression “for a reason not related to the individual concerned” was not clear, employers must show a reason that was “direct and personal” to the dismissed employee to fall within the definition. On the basis of that test, the collective consultation obligationsapplied to three of the four test cases brought by the union.
The EAT, however, said the tribunal’s requirementfor a reason that could be described as “direct and personal” amounted to importing a new definition of “relating to the individual” into the statute. It was clear that all four employees had agreed at the outset to an FTC, accepting that their employment would come to an end on a particular date or on the occurrence of a particular event. Unlike employees employed under open-ended contracts, they did not have any reasonable expectation of employment for an indefinite period and were therefore excluded by section195 of TULRCA from the ambit of section 188.
Decision of Court of Session
The Court of Session agreed. It held that the question to consider was whether the reason for dismissal was one that was "not related to the individual concerned”, wording that was perfectly clear and unambiguous.
In each of the four test cases, the employees had voluntarily entered into the contract and agreed to terms that were specific to each of them, including a term that their employment would cease on a particular date or when a particular event occurred. At least one of the reasons for the dismissals was based on the fact that they had agreed to accept this term.
As each employee had agreed that the duration of the contracts could be limited, terminating their employment when it expired was a matter that was clearly related to the individual concerned. As such, they could not be considered to have been dismissed as redundant and their dismissals could not be included in the number of people that were needed to trigger collective consultation requirements.
That was not to say that the termination of a FTC would always be related to the individual concerned. In some cases it might not be, but the result depended on the facts of the particular case.
The government took advantage of an exception in the directive so that those employed on FTCs no longer need to be counted for the purposes of collective redundancy consultation, when they are dismissed at the expiration of the contract. That change came into effect for dismissals on or after 6 April 2013. UCU has submitted an appeal to the Supreme Court, the outcome of which we await with interest. Given the current state of the law, it is more important than ever that trade unions continue their efforts to develop positive policies with employers in relation to those employed on FTCs.