Most employers are familiar with the obligation to consult collectively with employees where there is a proposal to “dismiss as redundant” 20 or more people within a 90 day period. The meaning of "redundancy" for these purposes has always been wider than the more familiar definition used for the purposes of statutory redundancy payments. For example, it has long been recognised that imposing changes to employees' terms and conditions through termination and re-engagement falls within the scope.
In the recent case of Pujante Rivera v Gestora Clubs, the European Court of Justice confirmed that the definition is wide enough to include a situation where an employee could resign in response to the employer’s unilateral imposition of changes to their terms and conditions. The decision serves as a useful reminder to employers who are considering making significant changes to employees’ contractual terms that they should anticipate potential resignations when calculating the number of dismissals for the purposes of collective consultation.
This may be obvious when the proposed change is drastic and clearly detrimental, such as a pay cut, but employers should also be alive to the possibility of resignations in response to seemingly less fundamental changes, for example, to shift patterns. If an employee resigns as a consequence, even if that employee receives a payment of compensation (as was the case in Pujante), the resignation may need to be treated as a “redundancy”. Employers should take care to ensure they prepare carefully before commencing an exercise of this nature to avoid falling foul of the onerous collective consultation obligations and risking exposure to “protective awards” of up to 90 days uncapped pay per employee.