By Lois Madden

A recent case decided by the Employment Appeal Tribunal (EAT) could have a significant impact on the procedures which should be adopted by employers considering carrying out collective redundancies. In the case of E Ivor Hughes Educational Foundation v Morris and others [2015] UKEAT/0023/15/LA, the employer, a charity which operated an independent school, was found to have made a"reckless failure" in not seeking legal advice. Each of the 24 affected employees were afforded the maximum protective award of 90 days' pay in the EAT's judgment.

One of the key obligations in any redundancy process is consultation. In the Trade Union and Labour Relations (Consolidation) Act 1992, when an employer is"proposing" to make more than 20 employees redundant from one establishment within a period of 90 days, a duty arises to consult with the representatives of those employees. The legislation sets out that this consultation process should be carried out in"good time" and at least 30 days prior to the first dismissal.

The enabling EU Directive on this issue uses slightly different wording on timing. It refers to the point when employers are"contemplating" such redundancies. This discrepancy in wording has led to some difficulty in identifying when the consultation duty is in fact triggered.

In the case 2008 EAT case of UK Coal Mining Ltd v National Union of Mineworkers[2008] I.C.R. 163, it was held that consultation must begin at an early enough stage so that the business reasons for the proposal can be consulted on. The EAT was of the view that if a business closure was contemplated it was very likely that loss of jobs would be an inevitable result of this, so consultation should take place as part of the discussion on closure.

In the European Court of Justice case Akavan Erityisalojen Keskusliitto AEK ry and others v Fujitsu Siemens Computers Oy [2010] 1 C.M.L.R. 11, it was held that the duty is only triggered once the"business, strategic or commercial" decision had been taken which induced the employer to then plan for collective redundancies. At the contemplation stage the duty would not arise. A similar opinion was given by the Advocate General in the Court of Appeal case of United States of America v Nolan [2014] I.C.R. 685.

In this recent case of Ivor Hughes Educational Foundation, the same issue was addressed by the EAT. The head teacher was invited to attend a Board Meeting in February 2013 to discuss the rapidly falling number of pupils. She suggested a number of possible ways to improve the situation, but it was ultimately decided that the school would have to close that year if numbers did not improve.

In April 2013 the head teacher informed the governors that the projected pupil numbers for the following year was to be 99, resulting in an economic deficit of approximately £250,000. The governors decided to close the school at the end of the summer term of 2013, no consultation with the employees was carried out and the Foundation did not seek any legal advice as to their obligations.

Twenty four employees brought their claim to the Employment Tribunal (ET) for a protective award in respect of the Foundation's failure to consult, which was successful. On appeal the employer argued that the meeting in February had not triggered the duty to consult as the final decision to close the school was not made until April. The EAT examined the minutes from the meeting in February and found it to have features which coincided with both the test from UK Coal i.e. there was a"fixed, clear, albeit provisional intention," and the test from Fujitsu of"strategic decision… compelling the employer to contemplate or plan for the collective redundancies". Unfortunately the EAT did not express a view on which of the tests should apply. The employer also argued that their lack of legal knowledge was a"special circumstance" of the kind which could relieve them of the duty, the EAT did not give credence to that argument.

This case, although not creating clarity on the exact trigger of the duty to consult, makes it clear that the earlier an employer can act in a potential redundancy situation, the better. Best practice would be for the employer to initiate consultation at the"intention" or"contemplation" stage rather than at the later"strategic decision" stage, until the tribunal or the courts provide firm direction on the issue. In practice this may mean that employers should aim for any planned discussion or meeting on business cutbacks or closure to involve an element of redundancy consultation.

The lack of legal knowledge shown by the employer did not prevent the tribunal from the levying of punitive awards against them, highlighting the benefit in taking early legal advice in all cases where redundancy may arise.

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