Change in tone signals end near for ‘onerous consultation requirements’
A change in the law governing consultations for collective redundancies could be imminent after a statement from the Advocate General of the European Court of Justice (ECJ).
Advocate General Nils Wahl said it is not contrary to EU law for employers to count the number of potential redundancies at each work site separately.
This contradicts current UK rules that force employers to aggregate potential redundancies across multiple sites and offer a collective redundancy consultation if there are 20 or more affected posts.
The UK rules came in after an employment appeal tribunal decision in the 2012 Woolworths case forced employers to consult with staff whenever there were 20 or more redundancies in a period of 90 days, wherever those employees are located.
However, the opinion of the Advocate General, if followed by the ECJ, could see rules revert to the pre-Woolworths position and large employers would see a major reduction in red tape.
“Collective redundancy is very much a key issue in the UK, particularly when you consider City Link, Phones4U, Comet and most recently Tesco,” said Omer Simjee, employment partner at law firm Irwin Mitchell.
“Some of the Advocate General’s findings were unexpected however they will be met with a huge sigh of relief from many employers as the outcome is essentially good news for UK businesses. This of course depends on whether the ECJ follows his opinion that UK law as previously interpreted pre Woolworths is compatible with the directive. A reversion to previous rules would mean that in most cases, businesses will not have to aggregate all proposed redundancies taking place within 90 days to see if the 20 person threshold has been met."
However, Ed Goodwyn employment partner at Pinsent Masons, said: “While this is potentially very good news, employers must be pulling their hair out. Businesses have yet again been left in limbo not yet knowing whether the old or the new rules apply.”
He said that if the burden of red tape placed on UK Plc by the EAT ruling was stripped back it would be good news for HR directors.
“[They would] be able to reduce the time and money spent on gaining visibility of dismissals across complex multi-site businesses. [But] it will mean yet another overhaul of redundancy procedures no less than a year after widespread changes were made.”
Goodwyn said that most employers have adapted to the change brought about by the EAT ruling, and would therefore “have mixed feelings about this decision”.
“For businesses operating across multiple sites, such as retailers, a significant investment of time and money was made to ensure visibility of dismissals across the business, which might not always have been instantly apparent. This has been a major headache for HR directors and, particularly as we see significant restructuring programmes being rolled out among many supermarket chains, this continued uncertainty has been unhelpful.”
He said that currently, there is scope for employers to be in a perpetual cycle of consultation as individual redundancies implemented across the business are aggregated together.
The ECJ’s full decision is expected in about six months time.
The Advocate General's full statement can be read here