Where an employer proposes to dismiss as redundant at least 20 employees at an establishment within a period of 90 days or less he must consult about the dismissals with the appropriate representatives of the affected employees (section 188 Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA 1992)). This edition of Employment Highlights considers recent case law in relation to this area of collective consultation on redundancies and in particular the case of UK Coal Mining Limited v (1) National Union of Mineworkers (2) The British Association of Colliery Management (EAT /0141/07) which considered the scope of the consultation obligations imposed on employers.
When does the obligation to consult arise?
Section 188 TULRCA1992 applies where an employer proposes 20 or more redundancy dismissals at an establishment within a period of 90 days or less. In some cases an employer will ask for volunteers for redundancy in order to keep the number of compulsory redundancies to a minimum. A recent case has made it clear that for the purposes of deciding whether the collective consultation duty under section 188 is triggered, volunteers are to be included in the total number of employees proposed to be dismissed by reason of redundancy. In the case of Optare Group Limited v Transport and General Workers Union (EAT/0143/07), the employer had intended to make less than 20 people redundant at a site in Leeds. One of the steps in the redundancy procedure was to ask for volunteers, and in addition to seeking volunteers there would be a process of assessment through which those selected for redundancy were to be notified. Once the process for assessment was complete, notification was given to 17 people that they were at risk of being made compulsorily redundant as a result of the assessment exercise. In addition, the employer also decided to accept three volunteers who had applied for redundancy. The union therefore informed the employer that as a result of the voluntary and compulsory redundancies the employer proposed to make 20 employees redundant at the establishment and the obligation to consult under section 188 was therefore triggered. The EAT, in reaching its decision in this case also considered authorities which arose in the context of unfair dismissal as to the question of causation and who, in fact, terminated the employment. The EAT held that the three employees had not volunteered prior to the redundancy selection exercise occurring, but had volunteered because they were invited to do so when the employer sought volunteers to mitigate the impact of the redundancies. Consequently, the employees had been dismissed by reason of redundancy and had to be included in the total redundancy count for the purposes of section 188. As a result, the employer had failed to comply with its obligation to consult.
Proposing to dismiss
As noted above, the obligation to consult under section 188 TULRCA1992 arises where an employer “is proposing to dismiss” and consultations must start at this time. This phrase has been considered in a number of cases and “proposing” is generally held to occur at an earlier stage than an actual decision by the employer to make redundancies. In the case of Leicestershire County Council v Unison EAT/0066/05 theEAT held that for the purposes of section 188, “proposing to dismiss” must be interpreted as “proposing to give notice of dismissal” and that accordingly consultation must be completed before notices of dismissal are given. The case involved the Council’s decision to amend employees’ terms and conditions of employment by means of dismissal and reengagement. The definition of redundancy in TULRCA 1992 is wider than that in the Employment Rights Act 1996. It also applies on dismissal and re-engagement when introducing new terms and conditions. In the Leicestershire County Council case, the employment tribunal found that the Council had breached section 188 by failing to consult at the relevant time. The Council had argued that no duty to consult arose until Council members had approved the plan to dismiss and re-engage the staff. The employment tribunal considered that the obligation to consult must have arisen before the decision to dismiss had been taken. The EAT upheld the tribunal’s decision, following the purposive approach of the ECJ in Junk v Kühnel  IRLR 310 (see below). Consultation should be completed before decisions on dismissals for redundancy are made.
Timing of dismissals
Section 188 TULRCA 1992 sets out that “the consultation shall begin in good time and in any event -
- where the employers are proposing to dismiss 100 or more employees as mentioned in sub- section (1), at least 90 days, and
- otherwise at least 30 days,
before the first of the dismissals takes effect.”
The question that has therefore arisen in the past is whether employers can give notice of termination prior to the end of the minimum 30/90 day period of consultation. In the case of Junk, the ECJ was considering a German case as to when an employer, to whom the collective consultation obligations applies, is entitled to issue dismissal notices to employees prior to the end of the statutory consultation period. If an employer must wait until the full period of consultation has expired before issuing notices of termination, then that could considerably increase the period for which the employer must continue to consult and therefore its continuing liability to employees. The ECJ decision in Junk was that notices of dismissal cannot lawfully be given until after the process of collective consultation with the affected representatives has been completed. However, this simply means that once the notices of dismissal have been given there can be no further consultation on those redundancies. The decision does not require any specific period to elapse between the start of consultation with representatives and the first dismissal notice being given. The point in Junk is that employers must have properly completed collective consultation with employee representatives before notices of dismissal can be issued. This allows an employer to give notices of termination before the end of the 30 or 90 day period provided that the collective consultation process has been completed and the notices of dismissal do not expire before the end of that period.
Content of consultation
The actual subject matter of the consultation can be a difficult issue for employers. Section 188(2) TULRCA 1992 states that the consultation must include consultation about ways of avoiding the dismissals, reducing the number of dismissals and mitigating their consequences. The requirement to consult over ways of “avoiding dismissals” has recently been successfully argued to mean that the employer should consult over whether the redundancies should take place at all. Earlier cases had concluded that section 188 does not oblige an employer to consult about the reasons for the proposed redundancies, their economic background or the context in which the proposals arise. However, the landmark decision of UK Coal Mining Limited v (1) National Union of Mining Workers (2) The British Association of Colliery Management (EAT/0141/07) has made it clear that the consultation needs to include discussion of the business reasons for a closure prior to a final decision being made where the proposed closure will inevitably result in the redundancy dismissals of 20 or more employees.
In this case, the employer was proposing to close its colliery and as a result proposed to make all 158 employees redundant. The EAT held that the previous decision in R v British Coal and Secretary of State for Trade and Industry ex parte Vardy  ICR 720 to the effect that it was not necessary for employers to consult about the reasons for redundancies (also a shut down of a business in that case) was no longer good law in the light of amendments made to section 188 TULRCA 1992 in 1995. At the time of the Vardy decision section 188 only required consultation “about the dismissals”. Changes made in 1995 required consultation to include consultation about ways of “avoiding the dismissals”. In a case where the closure of a business will inevitably result in redundancies, the EAT held that the reasons for the redundancies and the redundancy dismissals will be inextricably linked and therefore the duty to consult will include consideration of the reason for the redundancies. This will inevitably lead to consultation commencing at an earlier point in time. Although the EAT held that the consideration of the business reasons for making the closure inevitably arose where there was a complete closure of the colliery, the obligation would also arguably apply where there is any proposed business decision that will inevitably result in the dismissal of 20 or more employees in one workplace, whether or not that workplace is to close. Employers will therefore need to start discussions with trade unions or employee representatives as soon as they have formed a clear but provisional intention to close a business.
Whilst this is likely to lead to lively debate between employers and trade unions (there is obviously a clear conflict between the employer’s overriding duty to consider its shareholders on the one hand and the trade union’s duty to further the interests of its members on the other), it is important to remember that in the UK, trade unions cannot ultimately prevent employers from going ahead with redundancies even if the trade union continues to oppose the proposals. As long as meaningful consultation has taken place, even if agreement cannot be reached, the employer will not be prevented from making the redundancies. In addition, unless the employer gives false reasons for needing to close a business (as was the case in UK Coal) an employment tribunal should not be able to examine the employer’s business case for making redundancies and decide whether it was the right decision. The tribunal should look at whether the employer properly consulted on the business reasons, rather than examining the reasons themselves. The EAT believes that “most employers will already inform union representatives why they are considering the need to close a plant and will respond to any union observations, even if they do not feel themselves legally obliged to do so” and, therefore, the decision will not require a significant cultural change in UK businesses. However, it will have a far greater impact on businesses that have previously failed to involve trade unions at an early stage of the decision-making process and have been more reluctant to enter into proper consultation with employees on collective redundancies.
How to carry out effective consultation
Employers will need to ensure that their obligations as to collective consultation are clear in their minds prior to making any decisions on redundancies. Planning will be key to the consultation exercise. The employer will need to:
- determine whether any business decision proposed is likely to result in at least 20 redundancy dismissals at one establishment within 90 days or less (including any voluntary redundancies); and, if it does
- commence consultation in good time by providing the necessary information to the employee representatives, including information as to the reasons for the redundancies (the employer must be able to back up any business case for the redundancies);
- ensure they comply with the time limits set out in TULRCA 1992 and do not issue notices of dismissal before the consultation process is complete;
- ensure that any notices of dismissal do not expire before the end of the minimum 30 or 90 day statutory period.