Employers are obliged to provide information to, and consult with, trade union or other appropriate representatives where they propose to make 20 or more employees redundant at one establishment within 90 days or less.
Traditionally, employers did not have to consult with employees’ representatives about the reasons for proposed redundancies. The duty was interpreted as a requirement simply to consult about how to carry out any redundancy programme that management deemed necessary.
But that position has changed as a result of last year’s decision by the Employment Appeal Tribunal (EAT) in the case of UK Coal Mining vs the National Union of Mineworkers.
The case concerned Ellington colliery in North-umberland, which, for years, had faced financial problems, potential redundancies and closure. In 2005, a flood suspended mining, affecting profits. Management decided that closure was inevitable and cited safety concerns as the reason for redundancies; 158 workers were made redundant in less than a month from the first announcement.
Newcastle Employment Tribunal found as a fact that the purported safety reason for the closure was untrue and that the economic viability of the mine was the main reason for the closure.
Although some limited consultation was found to have taken place, it considered that this focused on alternative employment and the calculation of redundancy and other payments. Whenever the union made requests or suggestions relating to other matters, such as challenging the closure of the colliery on safety grounds, it was found that the employer had effectively ignored them.
The tribunal accorded the maximum protective award of 90 days and held that the employer could not rely upon the special circumstances defence, as it had deliberately provided a false reason for the redundancy proposals.
As to whether the employer was obliged to consult on the decision to close the mine, the union accepted that the tribunal was bound by existing case law, which stated that no such duty existed.
The employer appealed and the union cross-appealed. The EAT dismissed the employer’s appeal. It went on to rule that EU law had widened the scope of the consultation obligation to include consultation over the avoidance of dismissals that, by implication, extends to consulting about the reasons for the proposed redundancies.
Well-advised employers have, for some time, produced cases outlining why they are contemplating making multiple redundancies, as a matter of good practice and in order to dispel any concerns that the proposed dismissals are not genuine.
Given the decision of the EAT, an employer will now normally be required to provide the information and should expect to have its reasoning challenged.
The extent to which an employer can be required to disclose sensitive financial information to support its reasoning (or challenges to it), in order to comply with the duty to consult, is still unclear, and is likely to prove a contentious area.
l Ray Silverstein is a partner at law firm Browne Jacobson LLP, advising clients on a wide variety of employment issues
=== Key issues for consideration ===
l Reasons given for proposed multiple redundancies must be truthful, otherwise an employer will be financially penalised.
l When contemplating making multiple redundancies, an employer must now consult on the reasons for them if redundancies appear inevitable.
l The duty to consult over the reasons for the proposed redundancies should not have a significant impact on timescales, but should be borne in mind by an employer.