When 20 or more redundancies are proposed at one establishment within 90 days or less, employers must consult with representatives of affected employees.
For these purposes, redundancy is defined as ‘a dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related’ (s.195 Trade Union and Labour Relations (Consolidation) Act 1992 (TULCRA)). This is a wider concept than the definition of redundancy in unfair dismissal law and the calculation of statutory redundancy payments. In University of Stirling v University College Union the Scottish EAT considered whether the expiry of fixed term contracts at their natural end date comes within the broader TULCRA definition of redundancy.
The Union brought a test case arguing that employees whose fixed term contracts had expired should count towards the threshold of 20 employees required for collective consultation. The Employment Tribunal held that a ‘reason related to the individual’ under TULCRA should be interpreted as meaning ‘direct and personal’ to the individual, such as conduct or capability, whereas redundancy should be something about the particular job done by the employee, or their length of service, disciplinary or sickness record. It concluded that the expiry of the fixed term contract was not a ‘direct and personal’ reason for dismissal, so it came within the wider TULCRA definition of redundancy for collective consultation purposes.
However, the EAT overturned this decision. It held that a reason relates to an individual if it ‘has something to do with him such as something he is, or something he has done’. This contrasts with a reason related to the employer, such as the need to change business practices or reduce headcount generally. A key reason for the dismissals in this case was that the individuals had agreed with the business that their contracts would come to an end on a specific date. This was a reason ‘related to them as individuals’ as opposed to a reason related to the employer, and the collective consultation requirements therefore did not apply.
This is a welcome decision for employers, since it clarifies that collective consultation is probably not required where fixed term contracts come to their natural end date. However, where the dismissal is for a wider business reason which is not specific to the employee, expiry of a fixed term contract may count towards the threshold of 20 employees triggering the collective consultation requirements.