Collective redundancies and consultation: when are the thresholds met?

Collective redundancies and consultation: when are the thresholds met?

Published:

Author: Sophie Macphail

Applies to: UK wide

The European Collective Redundancies Directive (Directive) requires Employers to consult with trade union representatives where redundancies are planned at one establishment.

The recent European Court of Justice (ECJ) case Pujante Rivera v Gestora Clubs Dir SL and another (C-422/14) questioned the definition of "redundancy" and considered which employees should be included in assessing whether the threshold has been reached.

The Facts

Gestora Clubs operated sports facilities across Spain. In September 2013 Gestora terminated the employment contract of Mr Rivera who received his notification of termination for economic and production reasons on 17 September 2013. Mr Rivera brought proceedings against Gestora challenging the validity of his redundancy. He argued that Gestora should have consulted collectively as in the 90 day period before and after his redundancy other contracts were terminated by Gestora which exceeded the threshold.

The Spanish Courts referred to the ECJ a number of questions on the interpretation of thresholds in the Directive. The most interesting of these was whether a resignation made in response to a unilateral detrimental change to an employee's contract could be considered a "redundancy" in collective consultation. In this case one of the employees had received notification of a change to her working conditions, involving a 25% reduction of her salary. These changes were made for reasons not related to her personally and were for the same reasons as the redundancies.

The ECJ considered that the objective of the Directive is to provide protection to workers where collective redundancies are proposed. The Directive does not define "redundancy" and the ECJ confirmed that it includes any termination of a contract without the employee's consent. These employees should have the same level of protection by a collective consultation as employees who are made redundant. "Redundancy" (for the purpose of collective consultation) should be interpreted widely and include the situation where a worker resigns in response to a unilateral change, made by an employer to an essential element of an employee's contract, for reasons unrelated to them personally. This resignation was a direct response to the unilateral change to her contract and was therefore made without her consent.

In the UK...

The requirement for a collective consultation process will arise when an employer proposes to terminate the employment of 20 or more employees, at one establishment, within 90 days or less where the reason for the dismissals does not relate personally to the individuals concerned. The definition of "redundancy" for collective redundancy purposes is much broader than its definition for the purposes of unfair dismissal or statutory redundancy payments and includes employers changing terms and conditions of employment through termination and re-engagement, proposed redeployment of employees and those who accept voluntary redundancy.

Employers should take care to include any employees who resign in response to unilateral detrimental changes to their terms and conditions when calculating the numbers of employees who are affected by reorganisations, as well as those redeployed to a substantially new post and those who accept voluntary redundancy. Should an employer fail to collectively consult with affected employees, it risks multiple claims and may face a protective award of up to 13 weeks' pay for each affected employee.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.