Employers must consult employee representatives about the reasons for proposing to close a business leading to 20 or more redundancies.

Statute requires employers to consult about ways of avoiding or minimising the proposed redundancies and mitigating the consequences, but under previous caselaw the reason for the closure has been off limits (although employers are obliged to inform representatives of the reason). Now the EAT has ruled that this is wrong, recognising that for the duty to consult about avoiding dismissals to have any meaning where closure will almost inevitably lead to dismissals, it must include consultation over the reasons for the closure. Consultation in this case would have enabled the unions to challenge the employer's given reason (health and safety), which the tribunal found to be deliberately misleading as the true reason was economic.

The same should apply where a proposal to restructure a department involves certain jobs being made redundant: the employer should consult over the reasons for proposing that restructure. Consultation must be with a view to reaching agreement, but ultimately management will be able to proceed with their proposal provided it listens to the employee representatives and genuinely considers any representations or suggestions put forward. The potential penalty for failure to consult is 90 days' pay per affected employee.

The lay members of the EAT in this case thought that most employers were already consulting over closure reasons and therefore the impact of the decision would be small. However, for employers not already doing so, consultation may now need to start earlier than before, while the closure/restructure is still just a proposal. Employers should also take care to ensure that minutes of management meetings reflect the fact that there is no firm decision, just a proposal which is subject to consultation.

The EAT also considered the employer's defence that special circumstances justify not consulting. It ruled that, although there is no duty to consult over the alleged special circumstances, there is a duty to consult over the dates of dismissal. In practice this may amount to much the same thing as it raises the reason why notices of dismissal could not be delayed until after consultation had taken place. (Coal Mining Ltd v NUM, EAT)