The European Court of Justice (ECJ) has held in its recent decision in UQ v. Marclean Technologies SLU that, in calculating whether the collective redundancy consultation obligation has been triggered, account must be taken of redundancies both before and after an individual dismissal. The decision was issued in November 2020 and we reported on it in our December Newsletter but it has only recently been translated into English.
The EU Collective Redundancies Directive (No.98/59) (the Directive) requires consultation between employers and employees in relation to collective redundancies. Under the Directive, a collective redundancy is triggered when a certain number of redundancies are proposed within a set period (the “reference period”). The Directive allows member states to adopt one of two slightly different formulas with reference periods of either 30 or 90 days. The UK’s collective redundancy law deriving from the Directive was implemented by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) which adopts the 90 day formula.
Under section 188 of TULRCA, the duty to consult collectively arises when an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days. The minimum consultation period is 30 days for between 20 and 99 redundancies and 45 days for 100 or more redundancies. Failure to consult collectively can lead to protective awards of up to 90 days’ gross pay in favour of each affected employee as well as potentially making any subsequent dismissals unfair.
The ECJ decision
The decision of the ECJin UQ v. Marclean Technologies SLU arose from a referral by a Spanish court. The employee (UQ) brought a claim for unfair dismissal arguing that her employer had failed in its obligation to consult collectively.
UQ was dismissed on 31 May 2018. She argued that, between 31 May and 15 August 2018, a further 36 employees were dismissed and, as such, her dismissal formed part of a series of redundancies which, taken together, triggered the obligation to consult collectively. The Spanish court referred the question to the ECJ, seeking clarification on whether the reference period of 30 or 90 days must be calculated taking into account only the period prior to the individual dismissal, or also the period after the dismissal.
The ECJ held that, in any particular case, the actual reference period will be those 30 or 90 consecutive days which include (i) the dismissal in question and (ii) the highest number of other redundancy dismissals. In other words, it could include periods before and after the dismissal in question.
Impact on employers – practical problems
The ECJ decision is likely to cause significant problems and the ECJ did not consider the practical implication of its decision. The decision essentially means that, in determining whether there are 20 or more proposed dismissals, the relevant reference period can be any 90 consecutive days within the period starting 90 days before the individual dismissal and ending 90 days after it. The specific 90 day period will be the one within which most redundancies occurred.
One consequence of this decision is that small numbers of redundancies, which do not trigger the collective consultation obligation when made, may retrospectively require such consultation if further redundancies are carried out within the following 90 days. It would not matter that later redundancies were not proposed at the date of the dismissal in question.
The impact of the decision on UK law may be limited by section 188(3) of TULRCA which states that, when determining the number of dismissals proposed, no account is taken of employees in respect of whose dismissal consultation has already begun. So, if the first group had been 20 redundancies and the employer started collective consultation, it would not need to consult collectively about a second group of 10. However, section 188(3) doesn’t help the employer who did not consult collectively when making 10 redundancies but subsequently proposes to make a further 10 redundancies within 90 days.
It is worth noting that despite Brexit, the ECJ decision may still be applied by the employment tribunals unless the higher courts decide to depart from it or the redundancy legislation is amended by the UK parliament.
Please contact our team for more information regarding collective redundancies and the impact of the decision on the UK law.