The obligations on an employer to inform and consult employee representatives when proposing redundancy dismissals under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 apply not just to downsizing proposals, but also to dismissals proposed for the purpose of introducing new contracts.
The European Court decision in Junk v Khnel [2005] IRLR 310 and the Court of Appeal ruling in Susie Radin Ltd v GMB [2004] IRLR have recently given these provisions real teeth. The former requires consultation to begin before issuing any dismissal notices. The latter states that if a tribunal finds no consultation has taken place, it must start from the base point of awarding the maximum permitted protective award of 90 days’ pay, and then examine whether there are any mitigating circumstances which would justify reducing the award.
In Leicestershire Council v Unison (EAT/0066/05) the council undertook a job evaluation exercise and consequently sought to implement a new grading structure. As a result, 1,100 employees would be downgraded in pay and bonuses (described in the decision as the ‘downgraded group’) while 1,550 staff were to enjoy less favourable terms, such as unsocial hours, weekend working and overtime (the ‘enhancement group’).
Discussions took place between the employer and unions, but they failed to agree. In mid-November, a council officer announced that changes would therefore be effected by issuing notice to employees of the termination of existing contracts, and offering new contracts. The formal decision by the council as a political body was taken to this effect on 12 December 2002, and a ‘consultation notice’ about the proposed dismissals was sent to the Unison union on 20 December. However, the employer did not consult at all with regard to the downgraded group. It offered to consult with the enhancement group, but Unison turned down the offer.
The tribunal found the employer had breached section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. A decision, not just a proposal, to terminate contracts had effectively been taken by the council officer’s announcement. The consultation notice to Unison was a month after the decision to dismiss had been taken.
As there had been “an intentional and total” failure to consult with the downgraded group, the full 90 days’ protective award was made, whereas the award for the enhancement group was 20 days. Both parties were at fault – the employer was late in beginning the process, but the union was at fault in turning down the employer’s invitation to consult.
The Employment Appeal Tribunal (EAT) upheld the tribunal’s decision on both liability and remedy. On compensation, it said the tribunal had correctly applied the Susie Radin case in relation to both awards. The case of Junk meant that consultation had to begin before any proposal to dismiss had been taken, ie, when the council officer reported the course of action to be put before the council, not when the council later approved it.
Employers can no longer argue that decisions have not been made simply because they have to be formally approved by another body at a later stage. In Dewhirst Group v GM (EAT/0486/03), the EAT had already held that a company board recommendation was effectively a proposal to dismiss despite the fact that it required subsequent shareholder consent.
Lessons for HR
- You must inform and consult prior to making a decision to issue dismissal notices
- Proposals to terminate contracts and introduce new ones with altered terms and conditions are covered by the statutory obligation to inform and consult, and are downsizing proposals
- An employer still makes a proposal to dismiss when a delegated officer or body effectively makes a proposal, even if it requires formal approval later
John McMullen is professor of labour law, University of Leeds
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