There have been two interesting cases on collective consultation in recent weeks. In the first, USA v Nolan, the European Court of Justice had been asked to determine when the obligation to collectively consult first arises.There has been some conflict in previous UK case law over whether this obligation is first triggered when the employer "contemplates" redundancies, or whether the trigger is later – at the point when the commercial decision which may lead to redundancies has already been made.In this case, the employee worked at a US military base in the UK, which the US government
decided to close down.The government did not however start any consultation until the decision to close the base had already been taken.
The case went up to the Court of Appeal, which decided to refer the question to the ECJ.Unfortunately, the ECJ took the view that because the military base was a public body, it was not covered by the European Collective Redundancies Directive, and therefore the court had no jurisdiction to consider the case.It has therefore been returned to the Court of Appeal, which will now have to make up its own mind.
In the second case, Renfrewshire Council v the Educational Institute of Scotland, the Employment Appeal Tribunal overturned the Employment Tribunal's finding that for collective consultation purposes, the "establishment" was the council's Education and Leisure Service, which encompassed a number of schools and other services.
The obligation to collectively consult is triggered where 20 or more redundancies are proposed at the same "establishment".A key question is therefore what counts as the relevant "establishment".Here, the teachers had sought to argue that the education and leisure service as a whole counted as the "establishment" – since a broader interpretation would result in more teachers falling within the scope of the collective consultation obligation.However the EAT felt that not to regard individual schools as a distinct entity "flies in the face of reason", noting that the term "establishment" connotes a physical presence.The EAT consequently found the tribunal's decision to be perverse and remitted the case back to the tribunal for fresh consideration.
Comment: It is obviously frustrating that we are no further forward in terms of knowing exactly when employers are expected to start a collective consultation process.Until the Court of Appeal rules on the Nolan case, we are left with conflicting case law and consequently, uncertainty.In the meantime, employers would be well advised to start collective consultation sooner rather than later in order to minimise the risk of expensive awards for a failure to inform and consult (up to thirteen weeks' uncapped pay per employee).
The question of what counts as an "establishment" for these purposes is always one that is fact specific, and if in doubt, employers would be well advised to take advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
