University of Stirling -v- University and College Union EATS/0001/11

Last week, the Employment Appeal Tribunal issued its judgment in the case of University of Stirling -v- University and College Union, concluding that the expiry of a fixed-term contract does not trigger the collective consultation obligations under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992.  The central issue to be determined was whether dismissal due to expiry of a fixed-term contract is for a reason or reasons "not related to the individual concerned", a category not covered by the collective consultation rules.

Under section 188, if an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, they must consult with appropriate representatives of the employees.  However, under the 1992 Act, "dismiss as redundant" is significantly wider than a business simply closing or cutting jobs due to reduced business need - section 195 provides that "references to dismissal as redundant are references to dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related". 

The University and College Union brought claims on behalf of four fixed-term employees of the University of Stirling as test cases.  In considering whether the expiry of a fixed-term contract amounted to a "dismissal as redundant" under section 195, the Employment Tribunal was of the view that the reason for any dismissal will, in some way, relate to the individual concerned - for example, in the context of redundancy, it might be due to the particular post held by the employee, or to his length of service or disciplinary or sickness record.  Accordingly, "a reason relating to the individual concerned" should be construed as a close and direct one that is personal to the individual, such as conduct or capability. 

The University appealed successfully to the Employment Appeal Tribunal (EAT). 

The EAT criticised the judge for looking for the redundancy to relate to a "direct and personal" reason, because that went beyond the terminology of the statute.  It considered that "a reason relates to the individual if it is something to do with him such as something he is or something he has done.  It is to be distinguished from a reason relating to the employer, such as his…need to effect business change in some respect".  It follows therefore that if the reason for the non-renewal of a fixed-term contract is due to a business decision by the employer which might potentially result in significant job losses, rather than focussing on the individual employee concerned, collective consultation would be required.  On the other hand, if the dismissal is simply due to the expiry of the fixed-term contract as a matter of course at a previously agreed and defined date, then the collective consultation obligations would not be triggered.

The EAT also noted that, although fixed-term contracts for three months or less are excluded from the collective consultation obligations under section 188, it does not necessarily follow that the obligations will apply to all fixed-term contracts for longer than three months - it really depends on the circumstances.  Finally, the EAT was of the view that the Employment Judge appeared to have approached matters on the basis that dismissal for the reason that the individual employee had knowingly agreed to a contract of employment for a finite term could never be a reason "relating to the individual concerned" - an approach he was not entitled to take.  

Employers must consider whether the expiry of a fixed-term contract is part of a wider business decision to reduce jobs across the organisation - if it is, the employer will be required collectively to consult with the affected individuals, or potentially be liable to pay protective awards.