Collective redundancies

Q How is redundancy defined?

A According to the Employment Rights Act 1996, an employee is dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to the fact that the employer ceases to carry on the business in which the employee was employed, or ceases to carry on that business in the place where the employee was employed. A redundancy will also occur when the business need for employees to carry out a particular kind of work has ceased or diminished.

Q Is an employer required to consult collectively prior to giving notice of redundancies?

A Yes. Under the Trade Union and Labour Relations (Consolidation) Act 1992, when an employer is proposing to make 20 or more employees redundant at one establishment within 90 days or less, the employer has a duty to consult with the appropriate representatives of those who may be affected, either by the proposed dismissals, or by the measures taken in connection with those dismissals.

Q When does a ‘redundancy’ take place for the purposes of the EU Collective Redundancies Directive?

A In Junk v Wolfgang Khnel (Case C-188/03 ECJ), the European Court of Justice (ECJ) considered whether ‘redundancy’ refers to the actual cessation of the employment, or the employer’s expression of its intention to bring the employment to an end. It concluded that the latter interpretation is correct.

It went on to say that an employer is only entitled to carry out collective redundancies after the conclusion of the consultation procedure.

The UK courts will now seek to interpret the provisions of the Trade Union and Labour Relations (Consolidation) Act 1992 to accord with the ECJ’s interpretation of the directive. Employers would be well advised to ensure they avoid giving notice of dismissal until consultation has been completed.

Q Who should be consulted?

A Trade union representatives must be consulted if the union is independent and recognised to conduct collective bargaining. Otherwise, existing representatives (such as members of a works council) or employee representatives who were specifically elected to deal with consultation on the proposed redundancies, may be consulted. The employer should also consult the individuals who may be selected for redundancy.

Q What should redundancy consultation be about?

A Consultation must be undertaken ‘with a view to reaching agreement’ and must cover ways of avoiding the dismissals, reducing the numbers to be dismissed and mitigating the consequences of the dismissals. Employers should not give staff notice of dismissal prior to the conclusion of consultations, as this might be taken as an indication that the consultations are a sham. This view is backed by the European Court of Justice’s recent ruling in Junk v Wolfgang Khnel.

Q What must be disclosed before redundancy consultations?

A The employer must disclose in writing:

– The reasons for the proposed redundancies

– The numbers and descriptions of staff proposed for redundancy

– The total number of employees of those descriptions employed at the establishment in question

– The proposed method of selecting those who may be dismissed

– The proposed method of carrying out the dismissals, including the period over which the dismissals are to take effect

– The proposed method of calculating any redundancy payments.

Q What happens if an employer fails to comply?

A If an employer fails to comply with the collective consultation procedures, affected staff may bring a complaint before an employment tribunal. If the tribunal finds the complaint well- founded, then it will make a declaration to that effect and may make a protective award.

The award requires the employer to pay the employees remuneration for a protected period, which begins on the date when the first of the dismissals to which the complaint relates took place, and ends up to 90 days later. If an employer fails to consult on an individual basis, an affected employee may bring a complaint of unfair dismissal.

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