Collective Redundancies Part I - Application
Collective Redundancies Part I - Application
Sadly, we have seen an increase in enquiries where the collective redundancy rules apply, and there is the passing reference to them in the Government’s furlough guidance.
In this note we focus on when the law applies. In the second article we look at the obligation in terms of informing and consulting the affected employees. The second article can be accessed here.
According to s188 (1) of the Trade Union & Labour Relations (Consolidation) Act 1992, the collective rules will apply “Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less…”.
Below we highlight some of the key aspects to consider:
1. 20 or more
There are two levels of application. If more than 20 employees are affected and where there are more than 100. In both cases, the rules will apply, its just the length of consultation in either case differs. For 20-99 employees, it needs to last for 30 days. For 100+ employees, its 45 days.
2. 90-day period
This is a rolling period, so if, for example, 8 staff were dismissed on 30th March 2020 as a result of COVID 19 and in May 2020 another 12 are made redundant, the rules will apply.
3. “Proposing to dismiss”
A key point (and one that has been the cause of much litigation) is the point at which the rules trigger, as their application is often much sooner than most employers think. The rules apply from the moment you are “…proposing to dismiss…”.
As such, if you are currently planning for the end of the furlough scheme and you consider that further redundancies / dismissals are required, you may well trigger the collective redundancy rules now.
4. Redundancy
As we covered in another recent article, the definition of redundancy is much broader for the purposes of collective redundancy. It's defined as being “…for a reason not related to the individual concerned or for a number of reasons all of which are not so related.” This will cover more than the traditional diminution of work or locality.
When calculating the number affected you should include anyone who has accepted a job offer and which you have withdrawn; depending on the reasons for withdrawal. In the current climate job offers are being withdrawn because of the pandemic, which would need to be included in the calculation.
With the current application of COVID 19, and potential for terms to be varied, any resignations or dismissals that result from a change to terms of employment will also be caught, and so need to be factored into the calculation.
5. One establishment
This is another area that has resulted in litigation, but largely because its arguable whether our domestic legislation is compatible with the European directive.
Following the Woolworths case “one establishment” was held to mean “a local employment unit”. While that meant each individual Woolworths’ store was treated as one establishment in that case, careful consideration of the facts is required to ensure the establishments are correctly identified, where the European Court has also decided that the test is “depending on the circumstances”.
6. Breach
Why does this matter? Well, if you fail to comply with the rules relating to collective consultation, each dismissed employee can claim up to 90 days gross pay as a protective award. There is no length of service required to claim this award nor any cap. It is, in effect, a penalty on you. Considering there could be a minimum of 20 people affected, the liability will be significant.
Further, there may also be a failure to fairly dismiss under ‘ordinary’ unfair dismissal rules as laid out in the Employment Rights Act.
What’s clear is that the short statement in s188(1) has resulted in masses of litigation around its interpretation and application and, at the same time, it’s probably one of the most expensive laws employers can fall foul of.
If you are contemplating dismissals as we approach the end of the furlough period, please do as the Government’s guidance suggests and seek legal advice to ensure you are not triggering the need to consult collectively.
If you would like specific advice, please contact the writer, Matthew Kilgannon, via mk@kilgannonlaw.co.uk
or on 01483 388 901.
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