Over the past couple of months, I have brought you some good news about employees who go off on sick leave… and you’ll be pleased to hear that the good news doesn’t stop there.
This month I am going be giving you some good news about redundancies. Oh I really am spoiling you!
I don’t want to speak too soon but…it may be getting a little easier for employers to make redundancies.
This is because the Attorney General and the European Court of Justice (ECJ) have said that the Employment Appeal Tribunal’s decision on redundancies was wrong (…Awkward…)!
So what’s this all about, and how may it affect you?
As you probably know, as soon as 20 redundancies are proposed over a 90 day period, you MUST collectively consult with employee representatives.
Sounds pretty straight forward right?! Well not always…
The problems come where you have many different sites up and down the country.
For instance, say you propose to make 5 redundancies at your London site. And unbeknown to you, your Nottingham site is proposing to make 10 redundancies, and your Manchester site is also proposing to make another 10. This is all going to happen within 90 days.
The rules as set by the EAT in the “Woolworths case” say that you can’t just look at what your site is doing. You need to look at what ALL your sites are doing and count up ALL the proposed redundancies over any 90 day period across the whole company.
You add all of the redundancies together to see whether you hit the 20 or more redundancies mark. And in the example above you would because 25 redundancies have been proposed.
So you can see how a handful of redundancies at different sites can quickly tip you over the edge of more than 20 redundancies.
This means that under these rules you MUST collectively consult or risk claims against you from disgruntled employees and having to pay out the protective award. This is up to 90 days gross pay per employee. This can get very expensive! Especially where you don’t realise that other sites are making redundancies.
It also proposes many practical challenges for employers and so…
Is there light at the end of the tunnel..?
This is because the Attorney General (the person that said the current rules are wrong) referred the Woolworths case to the European Court of Justice (ECJ). The ECJ have now looked at the case and has said:
- The current rules are wrong; and
- An employer should only need to collectively consult with employee representative where they propose 20 or more redundancies at ONE particular site.
So, let’s look back at our example above… Applying this way of thinking would mean that no collective consultation at the London, Nottingham or Manchester office would be needed.
Much simpler, I’m sure you’ll agree.
Time to crack open the champagne?
Yes – this is great news for employers. But let’s not celebrate too soon!
Frustratingly, the ECJ has referred the case back to the Court of Appeal. But, the Court of Appeal’s decision is likely to only be a formality.
So it looks like it’s going to be a long awaited bye bye to the current position, and in with the more simple rules. This is actually a full circle back to what we all thought the original position was before the “Woolworths case” but c’est la vie.
I don’t have a crystal ball to look into. But it would be very unusual if the Court of Appeal do not listen to the ECJ.
How can I protect my business?
In the period of limbo before the ECJ ruling which came out last week, my advice was to stick with the way you have been doing things for the time being. I.e. collectively consult if more than 20 redundancies are planned over your whole business (not just at your site).
However, given the ECJ’s judgement, my view is that employers can now revert back the the original pre-Woolworths situation….You only need to collectively consult if you propose to make redundant 20 or more employees within one establishment.
It will be a case of watching this space for the absolute final verdict but for now we can all breathe a sigh of relief…
If you would like any further advice on this topic or any other aspect of employment law, please do contact me for a confidential chat on 01332 227 595.
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