Employment Law – Redundancies – Duty to Consult Employees - Consultation – Closure
The law requires employers to consult with employee representatives when 20 or more employees are being made redundant at one establishment within a 90 day period.
It is interesting to note that it has been accepted that this does not mean the employer has to consult about the reasons for the closure of a business, even if the closure is going to lead to redundancies. This view is supported by the 1993 decision of R v British Coal Ex Parte Vardy.
At the end of October 2007, this view was changed.
The Employment Appeals Tribunal (“EAT”) has made it clear that this is no longer the case. On the 22nd of October 2007, the EAT came to a decision in UK Coal Mining Ltd v National Union of Mineworkers that in a business closure context:
"…The obligation to consult over avoiding the proposed redundancies inevitably involves engaging with the reasons for the dismissals, and that in turn requires consultation over the reasons for the closure".
In that case, a coal mine with more than three hundred employees was closed suddenly after it was flooded. There was no consultation with employees on their redundancy and therefore they complained.
An employment tribunal held that there should have been consultation, and subsequently awarded the maximum compensation available. The employer appealed against this decision, arguing that there was no duty to consult about the reason for the dismissals and therefore no liability to pay compensation.
The EAT, however, rejected this argument. The appeal was therefore dismissed.
In arriving at its decision, the EAT recognised that under the relevant law it is the proposed dismissals that must be the subject of any consultation, and not the closure itself. However, it was of the opinion that if the closure of a business and the dismissal of its staff are inextricably linked, as they were in the circumstances of this case, then the duty to consult should also be deemed to include a duty to consult over the reasons for the closure.
It is interesting to note however, that the EAT also accepted that there could be cases when this duty would not arise. Such exceptional circumstances would include the situation where an employer plans a closure but believes that redundancies would be avoided. In such circumstances there would be no need to consult over the closure decision itself. The EAT did expressly state that such a situation is only likely to arise in a very exceptional case.
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© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.
