Landmark ruling on collective redunancies

An apparent landmark ruling by the Employment Appeal Tribunal (EAT) is likely to have significant implications for employers making large scale redundancies.

The law provides that an employer who is proposing to make 20 or more employees at one establishment redundant within a period of 90 days or less must consult employee representatives about those dismissals. Failure to do so can result in a protective award of up to 90 days’ gross pay per affected employee.

In a case arising out of the Woolworths insolvency in 2008, however, it is being reported that the EAT has ruled that the words “at one establishment” in the legislation are to be “disregarded” for the purposes of any collective redundancy involving 20 or more employees.

The effect of the ruling is that, where an employer proposes to make 20 or more redundancies over a period of 90 days, it will now have to consult collectively with employee representatives, irrespective of whether those employees are based at one large site or over several locations. This represents a significant shift from the current “establishment” based approach to the collective redundancy consultation rules. Employers will now need to coordinate and monitor redundancies across their businesses to ensure the consultation provisions are not inadvertently breached.

The actual judgment of the EAT has yet to be published but, assuming reports of the judgment are correct, any employer proposing to dismiss as redundant 20 or more employees, irrespective of whether those dismissals take place at a single location or across several locations, will now be potentially caught by these new collective redundancy obligations.

Please contact our Employment Law team for further advice –