When is a decision to make redundancies not a decision?
Collective redundancies just got more complicated… again.
It’s a shame, because they had become simpler after the Woolworths case confirmed that you only have to focus on establishments within a business (rather than on a business as a whole) when deciding whether to consult collectively in a redundancy situation.
Problem: the trigger point for when an employer has to start consulting about collective redundancies may have been brought forward to a time that many employers would regard as being no more than an in-principle (not a final) decision. This brings uncertainty.
Facts: the E. Ivor Hughes Educational Foundation operated a girls’ school. Due to a projected decline in the number of pupils, it was decided in February 2013 to close the school unless numbers increased. Due to the subsequent actual decline in the number of pupils, it was decided in April to close the school at the end of the 2013 summer term. All 24 staff were then given notice of dismissal on 29 April (4 days after the decision to close the school had been taken) to expire on 31 August. No collective information or consultation was carried out (apparently the Foundation had taken no legal advice and so didn’t know about the need to consult). The staff then brought claims for a Protective Award for failing to consult and won the maximum 90 days’ compensation. This was costly for the Foundation, whose appeal against the Protective Award failed.
Issue: you might be forgiven for thinking: “Serves Them Right”, given that dismissal notices were served only 4 days after the decision to close had been given; and given also that the Foundation apparently took no legal advice. But the issue is this: should the Foundation have started consultation in February 2013 (when they took an in-principle decision to close the school if pupil numbers remained low); or could they have waited until April (when their in-principle decision was converted into an actual decision) before starting consultation? Supporting this proposition are the follwoing points: (1) an in-principle decision about having to make redundancies was only speculative and fell well short of the need to “propose” redundancies (the UK legislation trigger – which is more specific than the comparable EU legislation that refers to the broader need to “envisage” redundancies); and (2) the trigger for having to consult collectively should have been activated only after the need to make redundancies changed from being speculative to definite (when there would have been at least half a chance of avoiding liability for Protective Awards if dismissal notices had been delayed for 30 days’ consultation).
Judgment: the Tribunal accepted that the final decision to close the school was deferred to April 2013, but that a decision had already been taken in February that, unless pupil numbers improved, the school would definitely be closed; and that this conditional decision amounted to a proposal to dismiss (because even though it was less than an actual decision, it was more than a possibility and compelled the School to plan for collective redundancies) that triggered the need to consult collectively. The Tribunal also decided that there were no special circumstances (such as the adverse effects on the school and on pupil numbers of a “leak” of its parlous state) that would have made consultation impractical (which would have reduced or diminished the Protective Award). All of these findings were endorsed by the Employment Appeal Tribunal.
Lessons: when faced with the possibility of 20 or more redundancies either (1) make sure that no decision is made (whether an actual decision, or a conclusion that would have the effect of you acting in the same way as if a decision had been made), or (2) start the consultation process immediately (however vaguely and for at least the minimum 30 or 45 days) because criticism of your transparency will be cheaper than a Protective Award.