Knowing when to start collective redundancy consultation is a difficult issue for many employers. The Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) states that the obligation to consult representatives of affected employees is triggered when the employer is ‘proposing’ to make 20 or more redundancies at one establishment within a period of 90 days or less, and that it must begin in good time.
However, this provision implements the European Collective Redundancies Directive which uses different wording. The requirement under the Directive is for consultation to begin where an employer is ‘contemplating’ redundancies. This seems to imply that consultation must take place at an earlier stage, when redundancies are envisaged as a possibility, rather than when they are actually proposed as required by TULRCA. In Nolan v USA the ECJ has been asked to clarify which approach is correct. This case concerned the closure of a US military base in the UK where consultation was delayed for some weeks after the decision to close the base was taken. As often happens, the situation was complicated by the decision being taken by an entity ‘higher’ than the employer which had the obligation to consult.
The Advocate-General has given an opinion stating that the Directive must be interpreted as meaning that the obligation to consult is triggered ‘when a strategic or commercial decision which compels the employer to contemplate or to plan for collective redundancies is made by a body or entity which controls the employer’. It was for the UK court to decide whether a strategic decision was made which exerted ‘compelling force’ on the employer giving effect to the obligation to consult, and the date on which that decision was made. If the prospect of a collective redundancy situation arises directly from the employer’s choice, the obligation to hold consultations arises when the employer contemplates or draws up a plan for collective redundancies. Consultation would be premature if it is initiated even though no strategic or operational decision has been taken, as this would lead to unnecessary uncertainty for employees. However, consultation would be too late if the strategic decision was made without leaving the employer any time in which to contemplate collective redundancies and consult properly.
The ECJ’s decision in this case will not come out until later this year. Until then, this opinion is useful guidance for employers contemplating a redundancy programme, particularly where a parent company is involved.