Consultation obligations in collective redundancies

The High Court has recently issued judgment in the case of Tangney and ors v Dell Products, Limerick.  This was an appeal on a point of law from a determination of the Employment Appeals Tribunal to the effect that the Respondent had not failed to comply with its obligation to consult with employees in accordance with section 9 of the Protection of Employment Act 1977 (the “1977 Act”) regarding a proposed collective redundancy.  While the High Court ultimately disallowed the appeal on the basis that the grounds of appeal advanced were matters of fact, rather than law, the judgment nonetheless considered (to some degree) when the obligation to consult arises in the context of collective redundancies.  This obligation is imposed by Directive 75/129/EEC (the “Directive”), which is implemented in Ireland by the 1977 Act.

Background

Dell Products Limerick (the “Company”) embarked on a rationalisation process in 2009 which resulted in 1,900 redundancies in Ireland, due to the closure of its manufacturing facility in Limerick.  On 8 January 2009, the Company issued a written communication to employees containing information in relation to the proposed redundancies.  The applicants’ case was that the communication on 8 January 2009 effectively constituted a notice of dismissal, and therefore any consultation which took place subsequent to that date did not comply with the Company’s statutory obligations under section 9 of the 1977 Act. 

Decision of the High Court

On the Company’s appeal to the EAT from the decision of the Right’s Commissioner, the Tribunal determined that no breach of the 1977 Act had occurred.  In the appeal from the EAT’s determination on a point of law, the High Court reviewed a number of decisions of Court of Justice of the European Union and found that the EAT had taken the view that the Company had embarked on consultation when a strategic or commercial decision compelling it to contemplate or plan for collective redundancies had been taken.  The Court observed that “many of the matters of substance” contained in the letter issued on 8 January 2009 changed between that date and the end of the consultation period, and that the letter did not constitute notice of dismissal.  For example a number of employees were redeployed, leaving dates were altered and the severance package was increased.  Ultimately, the High Court held that the decision of the EAT was in any case one of fact, and that accordingly there was no point of law which provided a basis for overturning that decision.

What this means for employers

Although the case does not make it absolutely clear when the statutory consultation process in respect of collective redundancies should be commenced, it seems that, at the very least, the employer should have made a strategic decision regarding its business which requires it to consequently consider the likelihood of ensuing collective redundancies (subject to consultation), prior to the commencement of any consultation process.  With regard to the content of any communication to employees, while employers are required to outline certain information under the terms of the Directive, any communication should avoid the possible inference that collective redundancies are a fait accompli.