Collective redundancy – the threshold for consultation

In a recent decision, the European Court of Justice (ECJ) has considered how the threshold for employers to conduct collective consultation under the EU Collective Redundancies Directive should be calculated.

UQ v Marclean Technologoes SLU (C300/19)

Facts

This case was referred to the ECJ by a Spanish court. It concerns the question of how the applicable threshold for collective consultation under Spanish law should be calculated. The claimant alleged that both prior to and following her dismissal, there were a number of other terminations that together amounted to a collective dismissal triggering the collective consultation obligations in Spanish law. She sought a finding that in accordance with the provisions under Spanish legislation, her dismissal was null and void due to her employer seeking to deliberately avoid the obligation to collectively consult.

ECJ decision

The ECJ held that under the EU Collective Redundancies Directive it is not sufficient to look only backwards in calculating the 20-person threshold (as is generally required under the Spanish legislation) or forwards (the approach taken in UK legislation under Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA)). Instead a rolling period of any 30/90 days (depending on the approach taken by the member state in question) must be applied in order to determine whether collective consultation obligations arise.

Consequences of this decision

Under TULRCA, an employer is required to engage in collective consultation and notify the Government (using an HR1 form) if it proposes to dismiss 20 or more employees for redundancy at one establishment in a period of 90 days or less. The effect of the ECJ decision is that the 90-day period should be interpreted as a rolling period, taking into account dismissals already in progress (or even completed) as well as proposed future dismissals. Unfortunately the ECJ judgment does not deal with the practicalities of how this would actually work in practice.

Since the case pre-dates the end of the transition period, it means that our employment tribunals (including the Employment Appeal Tribunal) are required to give effect to the ECJ’s decision by interpreting the provisions of TULRCA in accordance with the ruling. The problem is that the decision conflicts with the express wording of TULRCA, which expressly refers to proposed dismissals, meaning that an employment tribunal may not consider it possible to interpret the legislation in order to give effect to the ECJ’s decision.

It is therefore very difficult to predict with any certainty what effect this decision is likely to have in the UK. It is at least possible that employers who decide to make fewer than 20 employees redundant could still be caught under the obligation to consult with those employees, if they go on to make subsequent redundancies, tipping them over the threshold within a 90-day period.

If there is a realistic prospect that the threshold might be reached during that rolling period, the safest course of action would be for the employer to undertake collective consultation, particularly since the penalties for failing to do so are high. However, this might not be practical or desirable depending on the circumstances, and we would recommend employers to take advice in advance of making redundancies in order to minimise the potential risks.

These articles are from the May 2021 issue of Employment and Immigration Law Update, our monthly newsletter for HR professionals. To download the latest issue, please visit the newsletter section of our website. For further information please contact Liz Stevens or another member of Birketts’ Employment Law Team.