Call us on:  0808 172 93 22

Collective Redundancy Consultation – When “10 + 10” Equals “20”

financial legal obligationsWhere the implementation of a business proposal may result in large scale redundancies a number of legal obligations arise; these include consultation with appropriate representatives and notification to the Secretary of State. Failure to comply with these legal obligations has financial implications which can prove extremely costly.

The Law

Collective redundancy law derives from the European Collective Redundancies Directive which was implemented into domestic law by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). By virtue of section 188(1) of TULRCA employers are obliged to collectively consult where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

Crucial Question:

The crucial question for those employers whose businesses operate over a number of sites is “what, for collective redundancy purposes, is one establishment?” There has been a raft of case law on the point. In a number of cases which it decided to deal with together, the ECJ has been asked does “establishment” refer to all of the employer’s establishments in which dismissals are effected or does it refer to each individual establishment?

In other words, if a business proposes to dismiss for redundancy 10 individuals at a site in Northumberland and another 10 individuals at a site in Cornwall are they added together to make 20 and thus trigger a collective redundancy or are they treated as two separate and distinct exercises?

Advocate General’s Opinion:

Ahead of the ECJ’s decision in these cases the Advocate General has given the opinion that the concept of establishment “denotes the unit to which the workers made redundant are assigned to carry out their duties, which it is for the national court to determine…” in which case it is not necessary to aggregate the dismissals across all of an employer’s establishments for the purposes of determining whether there is a collective redundancy. To therefore take the example set out above it may not be necessary to add 10 + 10 together and thus trigger a collective redundancy.

Employers do need to be aware that the Advocate General went on to add that the issue of what is a local employment unit is a question of fact which will need to be determined in each instance.

Implications for Businesses:

On the one hand the Advocate General’s opinion offers a glimmer of hope to employers that an establishment is the unit to which the redundant workers are assigned which means, in theory, there will be fewer collective redundancy situations. However before a definitive view can be taken it will be necessary to decide where there are multiple business premises whether those business units together constitute a single local employment unit – by way of illustration the Advocate General gave the example of several stores in one shopping centre potentially forming a single local employment unit.

This therefore still gives employers a degree of uncertainty. That uncertainty may be removed when the ECJ delivers its decision as, whilst it is often the case that the ECJ follows the Advocate General’s opinion, it is not obliged to do so. We will report this decision when it is delivered – we expect that to be later this year. Pending that decision the sensible approach for employers currently is the aggregation of potentially redundant employees across different locations when determining whether there is a collective redundancy situation.

Contact Details

If you are faced with a potential large-scale redundancy or business re-organisation and you have concerns about identification of an “establishment” for collective redundancies please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Updated: by FG Solicitors
Call us on:  0808 172 93 22

COLLECTIVE REDUNDANCY CONSULTATION – WHEN €10 + 10€ EQUALS €20€

financial legal obligationsWhere the implementation of a business proposal may result in large scale redundancies a number of legal obligations arise; these include consultation with appropriate representatives and notification to the Secretary of State. Failure to comply with these legal obligations has financial implications which can prove extremely costly.

The Law

Collective redundancy law derives from the European Collective Redundancies Directive which was implemented into domestic law by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). By virtue of section 188(1) of TULRCA employers are obliged to collectively consult where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

Crucial Question:

The crucial question for those employers whose businesses operate over a number of sites is “what, for collective redundancy purposes, is one establishment?” There has been a raft of case law on the point. In a number of cases which it decided to deal with together, the ECJ has been asked does “establishment” refer to all of the employer’s establishments in which dismissals are effected or does it refer to each individual establishment?

In other words, if a business proposes to dismiss for redundancy 10 individuals at a site in Northumberland and another 10 individuals at a site in Cornwall are they added together to make 20 and thus trigger a collective redundancy or are they treated as two separate and distinct exercises?

Advocate General’s Opinion:

Ahead of the ECJ’s decision in these cases the Advocate General has given the opinion that the concept of establishment “denotes the unit to which the workers made redundant are assigned to carry out their duties, which it is for the national court to determine…” in which case it is not necessary to aggregate the dismissals across all of an employer’s establishments for the purposes of determining whether there is a collective redundancy. To therefore take the example set out above it may not be necessary to add 10 + 10 together and thus trigger a collective redundancy.

Employers do need to be aware that the Advocate General went on to add that the issue of what is a local employment unit is a question of fact which will need to be determined in each instance.

Implications for Businesses:

On the one hand the Advocate General’s opinion offers a glimmer of hope to employers that an establishment is the unit to which the redundant workers are assigned which means, in theory, there will be fewer collective redundancy situations. However before a definitive view can be taken it will be necessary to decide where there are multiple business premises whether those business units together constitute a single local employment unit – by way of illustration the Advocate General gave the example of several stores in one shopping centre potentially forming a single local employment unit.

This therefore still gives employers a degree of uncertainty. That uncertainty may be removed when the ECJ delivers its decision as, whilst it is often the case that the ECJ follows the Advocate General’s opinion, it is not obliged to do so. We will report this decision when it is delivered – we expect that to be later this year. Pending that decision the sensible approach for employers currently is the aggregation of potentially redundant employees across different locations when determining whether there is a collective redundancy situation.

Contact Details

If you are faced with a potential large-scale redundancy or business re-organisation and you have concerns about identification of an “establishment” for collective redundancies please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.