Under section 188 Trade Union and Labour Relations (Consolidation) Act 1992, ‘where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals’. Section 188 further stipulates that the consultation must include consultation about ways of avoiding the dismissals, reducing the numbers of employees to be dismissed, and mitigating the consequences of the dismissals. This has been interpreted in the past as amounting to a duty to consult in relation to the actual redundancy process rather than the underlying business reasons for the redundancies (R v British Coal Corporation and the Secretary of State for Trade and Industry, ex parte Vardy and Securicor Omega Express Ltd v GMB).
UK Coal Mining Limited, which owned the Ellington Colliery, decided to close the site for both economic and safety reasons without properly consulting with the National Union of Mineworkers (‘NUM’), the recognised trade union for most of the 329 employees. NUM commenced proceedings against UK Coal Mining for failure to consult in breach of section 188. The EAT held that where it is recognised that dismissals will inevitably, or almost inevitably, result from a closure, dismissals are ‘proposed’ at the point when the closure is proposed, which triggers the obligation to consult. The obligation to consult over ways of avoiding the proposed redundancies inevitably involves engaging with the reasons for the dismissals, which in turn requires consultation over the reasons for closure. The EAT emphasised that strictly speaking, it is the proposed dismissals that are the subject of consultation, not the closure itself. Therefore, in the rare circumstances where an employer who plans a closure in the belief that redundancies can be avoided, there would be no obligation to consult over the reasons for closure. Where closure and dismissals are inextricably interlinked however, the duty to consult over the reasons for the redundancies arises.
Effect on employers
This case serves as a warning for employers who plan to close a business or part of a business which will necessarily result in collective redundancies. They should ensure that consultation begins before a firm decision is taken to close and be prepared to discuss the reasons for the proposed closure with the unions or employee representatives. The requirement to consult over the reasons for the redundancies may result in increased costs and delays to the collective consultation process. Employers should keep documentary evidence that consultation has taken place over the business reasons for the dismissals, in order to avoid potential future liability under section 188.