The Employment Appeal Tribunal (EAT) has confirmed in the case of E Ivor Hughes Educational Foundation v Morris that the duty to commence collective consultation arose when a provisional decision was made to close a school.
Where an employer is proposing to dismiss 20 or more employees at one establishment within a period of 90 days there is a duty to consult with a recognised trade union or employee representatives. A failure to do so can result in a protective award of up to 90 days’ uncapped pay for each employee who was made redundant. Protective awards are penal, intended to punish the employer for failure to comply with its obligations, and do not depend on the employee suffering any loss. A special circumstances defence is available where it was not reasonably practicable for an employer to meet its collective consultation obligations but only where it took all such steps as were reasonably practicable in the circumstances to comply.
In this case involving a school, the question arose as to when the duty to commence collective consultation arose. There had been a decline in pupil numbers at the school over a number of years. In February 2013 the school made a provisional decision that, unless pupil numbers improved which it considered unlikely, it would make a decision in April 2013 to close the school. By April 2013, projected pupil numbers had fallen and a decision was taken to close the school at the end of the summer term in 2013. Within days, the school gave notice of redundancy to its employees but failed to carry out any collective consultation at all with the unions which represented the affected staff.
24 members of staff brought claims for protective awards in the Employment Tribunal and were successful. They were each awarded 90 days’ pay, the maximum award available when there has been a complete failure to consult representatives. The EAT upheld the Tribunal’s decision that the duty to commence collective consultation arose in February 2013 when the school took the provisional decision that it would close in the future, unless numbers improved. The EAT referred to two potential tests as to when a duty to consult arises, namely: i) when the employer is proposing but has not yet made a strategic decision that will foreseeably or inevitably lead to collective redundancies; or ii) when the decision has actually been made and redundancies are then being proposed. It concluded that based on either test, the duty to consult arose in February 2013.
The EAT also upheld the Tribunal’s decision that no special circumstances existed which rendered it not reasonably practicable for the school to consult collectively.
This judgment is a reminder to employers that the duty to collectively consult can arise before a firm decision is taken to close a workplace or make redundancies. With protective awards of up to 90 days’ pay per employee and with no cap on the level of a week’s pay, failing to commence consultation when the duty arises can and often does prove very costly indeed. It is recommended that legal advice is sought at an early stage in the business planning process where redundancies are one of the possible outcomes. The Supreme Court is due to consider a similar point in the case of United States of America v Nolan in July so watch this space.
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