In a surprising judgment,(1) the Employment Appeal Tribunal (EAT) has ruled that the simple expiry of a fixed-term contract without renewal is a dismissal for a reason "related to the individual concerned". As such, it is not considered a 'redundancy' for the purpose of the threshold of 20 proposed redundancies within a 90-day period triggering the collective redundancy consultation duties.

The EAT considered that at least one of the reasons for the 'dismissal' on non-renewal was the individual's own agreement to a fixed-term contract, accepting that it would come to an end at a particular date or on the occurrence of a particular event. This was a reason "related to the individual" because it had something to do with what he or she is or has done (ie, the fact that he or she has agreed to a fixed term).

The decision conflicts with the prevailing view that the expiry and non-renewal of a fixed-term contract should count for collective redundancy threshold purposes, unless the reason for non-renewal is something personal to the individual (eg, his or her conduct or capability). Non-renewal because the funding for a position has ended, or because the role was to provide cover for absence or work on a specific project which has come to an end, was thought to count. This was particularly relevant to those sectors which use fixed-term contracts extensively (eg, the education sector), but also where an employer was planning, for example, 18 redundancies in 90 days and the expiry of a couple of fixed-term contracts could tip the scales into collective consultation territory.

The decision is unclear as to whether the non-renewal of a fixed-term contract will always fall outside the definition of collective redundancies, or whether it could be covered if it can be seen as part of a wider redundancy exercise being carried out by the employer and/or where the individual can point to a reasonable expectation or common practice of repeated renewal of fixed-term contracts.

Pending any appeal, employers would be advised to err on the side of caution when carrying out wider redundancy exercises if the inclusion of fixed-term non-renewals would make the difference as to whether the collective consultation obligations are triggered.

For further information on this topic please contact Andrew Brown at Herbert Smith LLP by telephone (+44 20 7374 8000), fax (+44 20 7374 0888) or email (andrew.brown@herbertsmith.com).

Endnotes

(1) University of Stirling v University and College Union, EATS.

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