INSIGHT: Collective Redundancy – When Should Consultation Begin?

Posted on June 23, 2015

Following high-profile changes to the definition of “establishment” in collective redundancy cases, a new ruling has now confirmed when the obligation to consult is triggered. Andrew Murray, solicitor in the employment team at Pearson, discusses what this means for employers.

In the case of E Ivor Hughes Educational Foundation v Morris, the Employment Appeal Tribunal (EAT) dismissed the school’s appeal against a protective award of 90 days’ pay per employee after staff claimed there was a failure to consult over the school’s closure.

Confusion arose after the school decided in February 2013 that it would have to close at year’s end if pupil numbers had not increased by April, which it was later forced to do. There was never any consultation over this decision, in breach of Section 188 of TULR(C)A 1992, and the employees subsequently brought a claim to the employment tribunal.

In coming to its decision, the EAT considered an unresolved question from the United States of America v Nolan case in which the tribunal debated how the duty to consult should be triggered. Should the duty to consult be triggered when an employer proposes a strategic decision that will foreseeably or inevitably lead to redundancies, or when the decision has been made and redundancies are a consequence?

In this particular case, the EAT decided that the duty to consult arose in February regardless, stating that the school’s decision to close unless numbers increased ‘was either a fixed, clear albeit provisional intention’ and ‘amounted to a strategic decision on changes compelling the employer to contemplate or plan for collective redundancies’.

It also ruled out any grounds for appeal based on special circumstances after the school claimed that its failure to consult should be excused due to the need for the closure plans to be kept secret for fear of confidence in the school being lost.

This case clearly highlights that in any potential collective redundancy situation, employers must give consideration to the practicalities of consultation with employees and commence consultation proceedings in good time.

Failure to do so could result in businesses facing claims for protective awards in an employment tribunal, so legal advice should be sought if there is any doubt.

For advice on your collective redundancy obligations as an employer, please contact Susan Mayall on 0161 7895 3500 or email andrew.murray@pearsonlegal.co.uk.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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