The answer is: sooner than you think.
Employers often don’t start consulting until a formal decision has been made to make redundancies. Does this tie in with the legal requirement? The answer is probably not, and a school found this out the hard way in E Ivor Hughes Educational Foundation v Morris.
In this case, the school decided in February 2013 that if it did not attract a minimum amount of pupils by April it would have to close. If enough pupils could be recruited, then redundancies would not be needed. But should this have triggered the obligation to consult?
We know the law says consultation must start when redundancies are “proposed” and case law has refined this to mean less than a “decision” but more than a mere “contemplation”. The School didn’t think they had made a “decision” because they wanted to wait to see what circumstances would exist later down the line before deciding finally whether there would be redundancies or not (by seeing how many pupils signed up for that year). In the end, the level of pupils did not increase and the School closed. The teachers brought a claim for a failure to collectively consult and were awarded 90 days’ pay each as a protective award by the Employment Tribunal.
On appeal at the EAT, the Tribunal’s decision was upheld. It said that the decision in February 2013 to close the School unless pupil numbers increased was “either a fixed, clear albeit provisional intention to close the School or amounted to a strategic decision on changes compelling the employer to contemplate or plan for collective redundancies. On either analysis, the duty to consult arose on that date”.
What does this mean?
It means that now more than ever employers are going to have to consider when a proposal to make redundancies is a proposal that is material enough to trigger the start of consultation. Employers need to be aware that where redundancies are considered, even if subject to a reason or get-out provision, the obligation to consult will likely have been triggered. This could be counterproductive in itself as it could increase the chance of redundancies if clients (or in this case, prospective pupils) lose confidence in the employer, but employers ignore this at their peril. On this point, the EAT said that employees could have been consulted with a confidentiality agreement in place.
This case involved the requirement to collectively consult with employee representatives when 20 or more redundancies are contemplated, but could be an indication of what the Tribunal might expect for individual consultation as well. Please contact us for further advice.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.