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Collective redundancies: case law on the horizon

Adam Hartley, a Partner in our London office, comments: With the general election now firmly on the horizon, things have gone relatively quiet on the employment legislation front. However, attention now shifts to the courts, with two important decisions on collective redundancy expected in the coming months. This is a complex area of law which can lead to substantial liabilities for employers; the outcomes in the conjoined cases USDAW & Another v WW Realisation 1 Ltd (in liquidation) & Others, Lyttle & Others v Bluebird UK Bidco 2 Limited and  Canas v Nexea Gestion Documental & Another (together usually referred to as the Woolworths case)  and University College Union v University of Stirling will be watched with interest.

Advocate General’s opinion expected shortly in Woolworths case

As we have reported previously,  in January 2014, the Court of Appeal referred to the European Court of Justice (ECJ) questions about a case relating to the redundancies that followed the administration of the Woolworths and Ethel Austin chains of shops.

 The redundant employees claimed protective awards for failure to consult under the UK legislation (Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA))  which implements the Collective Redundancies Directive (CRD) and which requires an employer to consult with employee representatives when proposing to dismiss as redundant 20 or more employees at one establishment within a 90 day period. At the employment tribunal, only the claims of employees who had been employed at shops with 20 or more employees succeeded.  The claims of those who worked at stores with fewer than 20 employees failed.  At the Employment Appeal Tribunal, the Court interpreted the UK legislation so as to omit the words “at one establishment” from TULRCA.  The effect of this decision was that, technically,  UK employers are now required to consult collectively when proposing to dismiss as redundant 20 employees within 90 days, no matter where in the business the affected employees are located. (For more on the EAT decision see our Be Alert).

On 20 November 2014, the ECJ heard legal arguments in the Woolworths’ case (and two other conjoined cases) on the question of whether obligations to inform and consult under the CRD are triggered when, within a 90 day period:-

  • either there are at least 20 redundancies across an employer’s entire business (option 1); 
  • or only when there are at least 20 redundancies at an individual establishment (i.e. the local employment unit) (option 2).

DLA Piper is advising the respondent in Lyttle & Others v Bluebird UK Bidco 2 Limited. The Advocate General indicated at the hearing that his opinion will be handed down on 5 February 2015 and we will report in Be Aware when it becomes available.    The ECJ’s full decision is likely to follow approximately six months later.   Although a conclusion one way or the other on this issue is therefore in sight, in the meantime, the practical difficulties to which the EAT’s decision in the Woolworths’ case gave rise remain.  This is especially true for large multi-site employers where keeping track of numbers of redundancies is challenging and consulting collectively on unrelated redundancy dismissals is difficult and can be counter-productive.

Collective redundancies and fixed term contracts

The obligation to consult in relation to collective redundancy proposals in s. 188 TULRCA applies to employers who propose to “dismiss as redundant” more than 20 employees. By s.195 TULRCA, those words mean “dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related”.

On 21 January 2015 the Supreme Court in University College Union v University of Stirling heard an appeal regarding whether certain employees’ dismissals, at the expiry of their fixed-term contracts (FTCs), “related to the individual concerned” within the meaning of s. 195 TULRCA and thus did not count for the purposes of triggering collective redundancy consultation. The Court has been asked to consider whether a reference should be made to the ECJ.

In 2009 the University of Stirling proposed to dismiss employees as redundant, in order to offset a projected financial deficit. The University began consultations with trade unions including the University and College Union (UCU) but did not consider that it had any legal obligation to consult collectively in relation to proposed dismissals arising from the expiry and non-renewal of FTCs. The University did not, therefore, collectively consult with UCU or other unions on the non-renewal of FTCs in relation to these staff.

The UCU considered that the University’s collective consultation obligation extended to employees employed on FTCs, and complained to the Employment Tribunal. The Employment Tribunal held, in respect of four test cases, that three of the four employees had been dismissed and that those three had been dismissed as redundant. The Employment Appeal Tribunal overturned this decision, and the Inner House upheld the EAT’s determination. In the Inner House’s view, each of the test case employees had been dismissed for reasons particular to them as individuals, including that they had agreed that their employment would come to an end at a determinate point. They had not been dismissed as redundant, and there was no need to make a reference.

The Supreme Court has reserved its decision. In the meantime, employers who are conducting redundancy exercises at the same time that fixed term contracts are expiring may wish to consider whether to include those fixed term employees in the consultation exercise.


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