EAT ruling

01.01.07

The EAT has recently ruled that employers are under a duty to consult trade union or employee representatives about the reasons for redundancies where more than 20 employees are being made redundant at one establishment.

Background

Employers are obliged to consult collectively where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. The consultation must include ways of avoiding the dismissals; reducing the number of employees to be dismissed; and mitigating the consequences of the dismissals. Under previous case law it was thought that there was no obligation to consult in relation to the reasons for making the redundancies in the first place. The EAT have now decided that employers should consult about those reasons.

Facts

UK Coal Mining Limited owned the Ellington Colliery in Northumberland, employing 329 employees. In January 2005 water began to enter the colliery and within days the water level was too high for production to continue. On 26 January 2005 UK Coal decided to close the colliery on safety grounds. However, at this stage UK Coal had not obtained expert health and safety advice supporting the view that the colliery had to be closed and, in fact, the Mine Inspector's view turned out to be that the water did not constitute a danger to the workers.

The decision to close the colliery resulted in a proposal to make 158 employees redundant. UK Coal commenced consultation with the unions but soon thereafter, on 26 February 2005, went ahead with the first redundancies. The unions brought a tribunal claim for failure to consult.

Decision

UK Coal was found to be guilty of serious and deliberate failures in its consultation obligations and the maximum protective award of 90 days' pay was made in respect of each of the affected employees.

The most important point to be taken from the decision is that the EAT found that the obligation to consult includes an obligation to consult about the reasons for the closure itself. The EAT considered that for the duty to consult about avoiding dismissals to have any meaning, where closure will almost inevitably lead to dismissals, consultation must include the reasons for the closure. Consultation in this case would have enabled the unions to challenge the employer's given reason (safety).

This case was concerned specifically with a site closure but it is likely that the same principles would apply in relation to any other collective redundancy situation: for example, in a restructuring exercise, the employer would be required to consult with the representatives about the reasons behind the need to restructure.

Employers are already under an obligation to provide information to union/employee representatives on the reasons for their proposals (but not to consult on them) and the EAT commented that it did not believe that its decision would alter normal practice greatly. The extent to which it does change the consultation process in practice will depend on whether an employer normally responds to any questions from the representatives on the reasons for the redundancies.

This is an important decision as it means that an employer's reasons for large scale redundancy exercises can be questioned. However, it does not mean that representatives have the power to prevent a closure from taking place. The obligation is to consult with a view to reaching agreement, rather than to negotiate and reach agreement. Therefore, an employer will be able to proceed with any proposal provided it genuinely considers any suggestions put forward by the representatives in relation to the reasons for the redundancies.

UK Coal Mining Ltd v National Union of Mineworkers EAT/0397/06/RN and EAT/0141/07/RN