The Woolworth’s case has now been heard by the Employment Appeal Tribunal which was concerned with the definition of establishment for the purposes of collective redundancy consultation. Read on to learn more about how the case was decided, recent changes to the law in this area and some top tips for effective consultation.
Brief Overview of Collective Consultations
The duty to collectively consult arises where the employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.
- The duty is to inform and consult appropriate representatives of the affected employees.
- Consultation must begin in good time.
- Failure to comply with any of the rules on consultation can lead to a protective award being made by an employment tribunal. The maximum protective award is up to 90 days' gross pay for each dismissed employee.
On 6th April 2013, the Trade Union and Labour Relations (Consolidation) Act 1992 was amended to make the following changes to the rules on collective redundancy consultation:
- Where an employer is proposing to dismiss 100 or more employees at one establishment within a 90 day period, the minimum period before the first redundancy can take effect was reduced from 90 days to 45 days after consultation starts.
- Where an employer is proposing to dismiss 20 or more employees at one establishment within a 90 day period, employees on fixed term contracts are excluded from collective redundancy consultation obligations.
It is notable that the maximum protective award of 90 days gross pay has not been reduced in line with the change in the period of collective consultation for 100 or more redundancies, from 90 to 45 days. Where more than 20 but less than 100 redundancies are being effected the period of collective consultation period remains at 30 days.
To coincide with the changes introduced on 6th April 2013, ACAS published How to manage collective redundancies, a non-statutory guide aimed at employers. The guide explains an employer's legal obligations and how to run an effective collective redundancy consultation.
The Woolworths Case and the meaning of ‘Establishment’
In USDAW and others v WW Realisation 1 Ltd (in Liquidation) and another ET/3201156/10 and others, claims for protective awards were brought by a trade union on behalf of former staff at Woolworths, who were made redundant after the chain closed its stores at the end of 2008. An employment tribunal held that each Woolworths store (rather than the whole of Woolworths' nationwide retail operations) was an establishment.
On 30th May 2013, it was reported that the EAT had ruled that the words 'at one establishment' are here after to be disregarded for the purposes of any collective redundancy involving more than 20 employees, meaning that once it is proposed that more than 20 employees in a single business are to be made redundant, their location becomes irrelevant. Subject to any further appeal, this case would bring about a significant change to the current law on collective redundancy consultation and indeed had hard hitting ramifications for Woolworths (or rather the Secretary of State who may have to pay the claims from the national insurance fund due to Woolworths’ insolvency) as now all stores with less than 20 members of staff are liable for protective awards.
Top Tips for providing information during a redundancy consultation
- Detailed planning is the key to any successful redundancy consultation exercise. One of the first documents that the employer will need to have ready is the written communication to the employee representatives, detailing the information required under section 188(4) of the Trade Union and Labour Relations (Consolidation) Act 1992.
- One of the earliest topics on which consultation must take place concerns ways and means of avoiding the redundancies. The information provided to the employee representatives must include the reasons for the proposed redundancies.
- The employer needs to establish proposals for the number of, and timescale for, any redundancies. This will indicate whether consultation is required at all and what the minimum consultation period will be. Care needs to be taken to ensure that all relevant proposed "redundancy dismissals" are identified.
- The next stage is to identify the employees affected by the proposals. The information to be provided to employee representatives should break down the proposed dismissals by categories of employee and identify the total number of employees in each category employed at the establishment.
- The statutory information given to the employee representatives must also set out the proposals for selecting the employees to be made redundant. This means that the employer needs to formulate selection criteria and table these for consultation.
- The information provided must set out proposals for any redundancy payments over the statutory basic entitlement. Employers may have existing redundancy severance terms or may have terms which apply by custom and practice.
For advice or more information on the above, please contact Thrings’ Employment & Benefits team.