Collective Consultation: ECJ rules on calculating number of redundancies

In the UK, collective redundancy consultation rules are triggered when an employer proposes to dismiss 20 or more employees in a 90-day period. This has generally been understood to be forward-looking. In a decision which seems to conflict with this, the European Court of Justice (ECJ) has ruled that when working out whether collective redundancy consultation is required for redundancy dismissals, employers should calculate the number of proposed redundancies taking effect in a rolling 90-day period. They need to look backwards as well as forwards to include the period in which the greatest number of redundancy dismissals were made. 

Collective consultation: Background

The EU Collective Redundancies Directive requires employers to consult with employee representatives about collective redundancy dismissals. The Directive is implemented in the UK by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A). 

TULR(C)A requires collective consultation when an employer proposes to make 20 or more redundancy dismissals at one establishment within a period of 90 days or less. Dismissals “by reason of redundancy” are not limited to pure redundancies. They include any dismissal for a reason not relating to the individual employee concerned, such as when an employee is dismissed as part of a process of trying to get employees to accept new contract terms.

Where the threshold is met, an employer’s obligations include: 

• Providing specific information about the redundancies to representatives of the affected employees
• Consulting with those representatives about the proposals 
• Notifying the Department for Business, Energy and Industrial Strategy of the proposed dismissals 

Where an employer proposes that 100 or more redundancies will take effect in a 90-day period, consultation must begin at least 45 days before the first dismissal takes effect. This reduces to 30 days for between 20 and 99 redundancies.

Spanish Court seeks guidance from ECJ on calculating redundancy numbers

UQ worked for Marclean Technologies SLU in Spain. She was dismissed after a period of temporary incapacity. 

UQ claimed that her dismissal was one of several "covert" collective redundancies and the correct redundancy procedure had not been followed.  She argued that between 31 May 2018 (the date of her dismissal) and 15 August 2018, a further 36 people had left Marclean, which should have triggered a collective redundancy procedure under Spanish law. 

Under Spanish law, only dismissals pre-dating UQ’s dismissal counted when working out whether collective consultation was required. The Spanish court asked the ECJ whether dismissals after UQ’s dismissal should also count towards the threshold.

ECJ ruling 

The ECJ ruled the Spanish law was wrong to only look backwards from a particular dismissal. Equally it would be wrong to only look forwards. Instead, the Directive’s reference period is the period of any 90 consecutive days during which the relevant dismissal occurred and in which the employer dismissed the greatest number of employees as redundant (i.e. for a reason not related to the worker). 

If the threshold number of dismissals is reached at any point across the reference period, collective consultation is required. Dismissals that occur before or after the given dismissal count towards the threshold.

What does this mean for employers? 

The ruling means employers should look both backwards and forwards from an individual dismissal to determine whether 20 or more redundancies are proposed in a 90-day period. 

Regrettably, the ECJ did not consider the practical impact of its ruling for employers. Under the Directive, employers must inform and consult when they ‘contemplate’ collective redundancies. In addition, they must notify the relevant authority (BEIS in the UK) of ‘projected’ or ‘planned’ collective redundancies. In the UK, these obligations arise when an employer ‘proposes’ collective redundancies. These obligations are all forward-looking and TULR(C)A even provides that where collective consultation is already underway in respect of one batch of redundancies, you ignore the earlier batch when calculating the number of proposed redundancies. However, the ECJ’s ruling suggests these obligations may arise for dismissals that have already been proposed and even for dismissals that have already taken effect.  The judgment is not yet available in English.  

Going forwards, and pending any clarification of the ECJ decision once the judgment is in English, the cautious approach for employers planning redundancies and trying to work out whether collective consultation is required is to include all dismissals taking effect in any rolling period of 90 days, including those that have already taken place, those that are under way, those in respect of whom collective consultation has already begun and those proposed for the future. Employers will need to plan carefully to make sure they do not inadvertently exceed the threshold and may decide to delay some redundancy dismissals to ensure collective redundancy consultation obligations are not engaged in respect of earlier dismissals. Failing to comply with collective consultation obligations can be costly, with employment tribunals being able to award of up to 90 days’ full pay for each individual employee. 

What about Brexit?

The Directive will be retained in UK law under TULR(C)A after the Brexit transition period ends on 31 December 2020 and ECJ case law considering the Directive will continue to apply unless either the Supreme Court or Court of Appeal decides to depart from it. Therefore, this ruling will remain significant. 

UQ v Marclean Technologies SLU