It is established law that employers must consult with employee representatives when 20 or more employees are being made redundant at one establishment within a 90-day period. However, based on previous case law, employers were not required to consult about the reasons for the closure of a business, even if redundancies were likely as a result. Following UK Coal Mining Ltd v NUM & the British Association of Colliery Management, this is no longer the position. The case involved the closure in January 2005 of Ellington Colliery, Northumberland at short notice following a flood. UK Coal Mining employed 300+ employees at the mine, but failed to consult collectively with the recognised trade unions about ways of avoiding the dismissals on the basis that special safety circumstances negated the need for a 90-day consultation period. The Tribunal held that UK Coal Mining had failed to comply with its duty to consult and had not demonstrated “special reasons” for failing to do so. It awarded employees the maximum 90 days’ protective award. In reaching its decision, the Tribunal ruled that there had been no obligation to consult employees about the actual closure of the mine. UK Coal Mining appealed the decision to award maximum protective awards. The unions cross-appealed the Tribunal’s ruling that there was no obligation to consult over the closure.
The EAT not only upheld the maximum protective award per worker, it also ruled that in a business closure context, the obligation to consult over ways of avoiding proposed redundancies inevitably involves consideration of the reasons for the dismissals. That, in turn, requires consultation with employees over the reasons for the closure. Employers are advised to fully consult with employee representatives over close-down decisions and, more generally, the reasons for collective redundancies, or risk exposure to large financial penalties in the form of protective awards.