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UK HR e-briefing: EAT rewrites UK redundancy law

  • United Kingdom
  • Employment law - HR E-Brief

02-07-2013

EAT rewrites UK redundancy law

In our previous briefing in June we reported news of an Employment Appeal Tribunal (EAT) decision which addressed this single issue; is the collective redundancy consultation duty  triggered when 20 or more employees are potentially redundant across a business or when 20 or more are potentially redundant in any one establishment? As the EAT characterised it – is it a site‑by‑site atomised approach or a holistic approach?

Back in June there was no written decision to confirm the EAT’s answer to this question. It is now available here and it confirms that the EAT decided the duty is triggered holistically – when there are 20 or more potential redundancies across the business. In so doing, it took a purposive construction of section 188 and the collective redundancy consultation duty so as to give effect to EU law.

Why this change of direction now?

The EAT reached its decision based on the following reasoning:

  • The EU Collective Redundancies Directive provides two options for member states to frame how the consultation duty is triggered
  • The UK, according to Hansard and other contemporaneous publications, intended to adopt the second of these two options when implementing the Directive into UK law
  • This second option requires the duty to be triggered when “over a period of 90 days, at least 20, whatever the number of workers in the establishments in question” may be dismissed
  • According to the EAT, the correct interpretation of this option is that the obligation to consult arises when 20 or more are to be dismissed irrespective of where they work
  • However, section 188 limits the obligation to where there are 20 or more dismissals at one establishment
  • The EAT came to the view that the clear Parliamentary intention was to implement the Directive correctly and the introduction of the “at one establishment” wording was potentially a drafting error and did not reflect the express intention of Parliament to limit the protection of section 188
  • As a court must construe UK law so that it complies with EU law, the EAT decided that the words “at one establishment” should therefore be deleted from section 188
  • It felt able to take this bold step, despite previous case law suggesting it was for Parliament to correct any error in the drafting, because legal authorities have moved on and there are now statements of principle which, in the EAT’s view, set down the extent of the court’s interpretative function where the literal words of a statute are in conflict with the Directive
  • When interpreting UK legislation compatibly with EU law obligations, the EAT took the view that legal principles permit “additional words to be put in. They could be taken out; they can be moved around” (according to Marleasing SA v La Comercial Internacional de Alimentación SA).

As an aside, the EAT expressed also a view that it was entitled to take this purposive approach and not, instead, make a reference to the Court of Justice seeking guidance on the compatibility of section 188 with EU law. In its view the duty to consult is not only an obligation contained in a Directive, it is part of fundamental EU law as the duty to consult is contained in the Charter of Fundamental Rights of the European Union which is now part of the Treaty of the European Union.

Comment

While it has been argued by some for many years that limiting the collective redundancy consultation duty to 20 or more dismissals at one establishment failed to comply with EU law, most did not expect the EAT to grasp the nettle in this bold way. Instead, it had been assumed such an outcome would follow Parliamentary consultation on the re-drafting of section 188, potentially in response to an adverse decision of the EU Court of Justice.

It is clearly a controversial decision, both legally and practically. Indeed, the EAT itself is split with disagreements over whether the appeal should have been heard in the first place and this EAT panel came to its decision without the benefit of rigorous legal argument from the respondents.

In the meantime, large multi-site employers should act to closely manage the numbers of potential redundancies across all sites to ensure the collective consultation trigger is not missed. Where there are regular but small number of redundancies at different sites, some employers may move towards a standing body of elected representatives for the affected employees to avoid repeated ad hoc elections. However, while the trigger for redundancy operates across the whole business, it remains the case that the content of the consultation may reflect different, more local issues and care is needed to ensure the information and consultation duties are met in each circumstance. In other words, while the trigger is “holistic”, as the EAT called it, the actual content of the consultation must be tailored to the dismissals involved. Finally, the HR1 form is now out of step with the EAT’s decision and prudence would suggest that employers should give notice at the same time as notifying the appropriate representatives (although there have been reports of a poor reception where employers have done so because historically the HR1 is used to alert job centres where there are large numbers of redundancies, not where there are smaller, dispersed numbers).

 

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