A ruling by the European Court of Justice has caused some concern in employment circles after the court decided that employers should look at a “rolling” 90-day period when deciding whether collective redundancy consultation is required. The case in question is UQ v Marclean Technologies which says employers must look both backwards as well as forwards from an individual dismissal to determine whether the collective redundancy threshold is met. It means that even if a redundancy process is already underway when further redundancies are proposed, or, arguably, even where dismissals have already occurred, there is a risk that these will be counted within the threshold, meaning the consultation obligations may bite for all the redundancies, both the original batch and the subsequent batch. Is that a problem for UK employers? Potentially yes when you look at the wording of the UK legislation:
Sections 188 and 193 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) give effect to the EU Collective Redundancies Directive (the Directive). They require an employer to engage in collective consultation if it is “proposing to dismiss” as redundant 20 or more employees at one establishment within a period of 90 days.
In the UK the concept of “proposing to dismiss” has generally been understood to refer to the future dismissal of employees so this ruling, that you need to look backwards as well is forwards, is clearly a problem. To understand why, and whether employers need to change their practices, I phoned Stuart Neilson who is based in Glasgow. I put it to him that this case is a concern for employers:
Stuart Neilson: "Yes I think it is a concern for UK employers because in the Spanish case what happened was that there was an individual who was made redundant, there wasn't any formal consultation carried out at that period, which if one was looking at it from a UK perspective would be right, there was only one person being made redundant, that's fine, you don't collectively consult, but then, within 90 days from that period, there was another group of employees, 36 employees, made redundant who were collectively consulted with, but the issue was from the one employee who had been made redundant earlier and she argued, well, you should have collectively consulted with me and the Spanish court referred that to the European Court of Justice and the European Court's justices said yes she should have been collectively consulted with. Now that that is very worrying because what it effectively means if that decision is to be followed in the UK employers would be under no obligation to collectively consult with an individual, or individuals, less than 20, even when they didn't actually have a proposal at that point in time to dismiss more than 20 in the 90 days. So if you can imagine the situation that might happen in the UK, you've got 10 people, you're making redundant now and that's all you're proposing but then in, let's say, six weeks time you lose a contract, something happens, and you then need to make another 15 redundant. What this decision from the European Court seems to be suggesting is that you not only need to collectively consult with your 15 in six weeks time, but actually, you then had an obligation to collectively consult with the first batch of 10, even though you didn't know that at the time. So I find that a very worrying decision which does seem to require players to act sort of retrospectively in a way and I just don't see how they can they can do that. So I think it is a it's a troubling decision and I suppose it remains to be seen to what extent the UK courts will pick up on this and what they will make of it.”
Joe Glavina: "Just thinking about the impact of Brexit, Stuart. This decision was in December when the UK was still in the transition period, and we know that any decisions in that period are technically binding on the UK courts. Is there any way round that do you think?”
Stuart Neilson: “So this one is binding on our lower courts. It can be overturned by a decision from the Court of Appeal or the Supreme Court, but it is technically binding on us at the moment. However, having said that, I think the one thing that I think might be a way that UK courts could look at this is to say that the decision just goes so against the grain and the meaning of the UK legislation that actually it's simply impossible for the lower courts in the UK to follow that European decision and they may just decide that we're going to follow the UK legislation and take that position, and if that means that the UK is technically in breach because it didn't properly implement the European law, well so be it. So my view at the moment is that if I'm advising employers I'm probably sticking pretty closely to the UK position but we just need to be aware that this European court decision is out there, and has a potential to cause some difficulties for us, but I think we pretty much have to stick closely to the UK position for now.”
Stuart and the team have produced a number of guides on redundancy and collective consultation covering both UK law and many other jurisdictions. You can find all of those guides, and news of the latest developments, on the Outlaw website.