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Ruling has important implications for employers making a large number of redundancies

Posted by TonyBrownEmploymentSolicitor on August 8, 2013

A decision of the Employment Appeal Tribunal (EAT) could have important implications for employers making a large number of redundancies.

The law says that employers must consult employees’ representatives if they propose to dismiss 20 or more employees for redundancy within 90 days or less. Failure to do so can result in large awards of compensation for each employee affected by the redundancy. The EAT ruling requires that the duty to consult employees’ representatives arises when an employer proposes to make those redundancies across the business and not, as previously understood, when 20 or more employees are potentially redundant in any one establishment.

As a result of this ruling, employers will have to consult employee representatives irrespective of whether the 20 redundant employees are based at one site or over several locations. This represents a significant change to the current practice and means employers will need to coordinate and monitor redundancies across their businesses to ensure the consultation provisions are not inadvertently breached.

The facts of the case were that, after Woolworths went into administration in 2008, unions representing the employees complained to an employment tribunal that Woolworths had failed to comply with its obligations to consult the employees under UK collective redundancy consultation law.

The tribunal ruled that each Woolworths store was a separate establishment, so that the obligation to consult collectively only arose in larger stores where 20 or more employees were to be made redundant. The result was that employees in larger stores received compensation for failure to be consulted, whereas their colleagues in smaller stores employing fewer than 20 employees received nothing.

Overturning the tribunal’s decision, the EAT ruled that the words “at one establishment” in the legislation are to be disregarded for the purposes of any collective redundancy involving 20 or more employees.

Comment

Until this decision, multi-site employers were able to fall back on the ‘establishment test’ in order to avoid triggering the collective redundancy consultation rules. The EAT’s decision means that employers will have collective consultation obligations if they propose to make 20 or more employees redundant, irrespective of whether those dismissals take place at a single site or across several sites.

Employers who have a number of branches or offices across the UK will have to co-ordinate dismissals which may fall under the ambit of the collective redundancy consultation obligations.

If you would like advice about how the issues in this note apply to your situation, please contact Tony Brown on 01225 740097 or by e mail to tony@bathemploymentlaw.co.uk

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