Tricky year ahead for collective redundancy compliance

The Court of Appeal’s decision to make a reference to Europe in the Woolworths case has further extended the period of uncertainty institutions face when working out whether their collective consultation obligations have been triggered. In addition they will now have to familiarise themselves with some fairly complex additions to the statutory requirements in a TUPE context which took effect on 31 January.

The main issue in the Woolworths case is whether each establishment maintained by an employer should still be treated in isolation when calculating the threshold number of proposed redundancies which triggers the obligation to consult collectively. The literal reading of the legislation would suggest this is the case, but last year’s decision of the Employment Appeal Tribunal calls this into question. Its view was that due to the effect of the underlying EU directive, redundancies across the employer’s entire operation should be aggregated when calculating whether the threshold of 20 employees has been reached.

The EAT’s conclusion has been challenged by the government, which is ultimately liable for the resulting protective awards due to Woolworths’ insolvency. It had been hoped that the Court of Appeal would be able to make a decision on this point, but it has now decided to make a reference to European Court of Justice. In the meantime institutions planning redundancies across a number of different sites will have some difficult decisions to make.

The other key recent development in this field is some fairly complex amending regulations which will open up a new way of conducting collective redundancy consultation in the context of a TUPE transfer. Under these new rules, which apply to transfers taking effect from 31 January onwards, the new business owner or contractor will be able to start consultation before the transfer takes effect with the staff it is due to inherit following the transfer. Technically this has not been possible before, because under the old legislation consultation could be conducted only by the current employer.

Pre-transfer consultation will not be possible without the agreement of the existing employer. In appropriate circumstances making an early start to collective redundancy consultation could be in the interests of all parties involved. However, the new rules are currently untested and may well throw up difficult issues of interpretation.