What the law says

One of the most important questions that employers need to address when planning collective redundancies is when they should start consultation in order to stay on the right side of the law. Unfortunately the answer is not straightforward, despite many years’ worth of case law.  

The starting point is the minimum consultation period laid down in the legislation: 30 days if 20 or more employees are potentially involved and 90 days if 100 or more are in the redundancy frame. The time is calculated by working back from when the employer envisages the first of the redundancies will take effect – ie, when dismissal notices, if given, are expected to expire. But on top of that there is a requirement to start consultation in good time. That means the minimum period may not be enough.  

Closure of US base

So when is the earliest point at which an employer should start consultation? The answer is to look at when the legislation is engaged: in other words the point at which the employer is to be regarded as “proposing to dismiss” the relevant number of staff as redundant. This issue has been examined recently by the Court of Appeal when looking at the closure of a US military base in Hampshire.

Because of the sensitivity of the decision, consultation did not start until late in the day. The US Government argued that it did not need to begin until a firm decision to close the base had been taken, which was not possible until high level and largely confidential military decisions had been taken. The employees’ side argued that this was far too late in the day to start meaningful consultation. The closure of the base had been on the cards for many months before the formal decision had been announced, by which time redundancies could not be avoided.  

Court of Appeal refers to ECJ  

The Court of Appeal felt unable to say which argument was correct. This was because our domestic legislation uses slightly different terminology from the EU Directive on Collective Redundancies which it is supposed to implement. It is possible that the use of the word “contemplate” in the Directive, rather than “propose” in our legislation, suggests that the requirement to consult is triggered at an earlier stage in the decision-making process. In this context that would mean that the employees’ argument was right, and the requirement to consult arose when redundancies at the base became a distinct possibility, rather than at the point when the decision was finally taken to close the base.  

Better safe than sorry?  

The Court of Appeal decided that earlier case law did not provide a clear answer, so it has invited the European Court of Justice to come up with a definitive ruling. In the meantime employers, faced with continued uncertainty over what the law means, may decide it is better to be safe than sorry and consult sooner rather than later.