Controversial ECJ case on collective consultation thresholds

Controversial ECJ case on collective consultation thresholds

Redundancy

In UQ v Marclean Technologies SLU, the European Court of Justice has suggested that employers must look both backwards as well as forwards from an individual dismissal to determine whether there are 20 or more proposed dismissals in a 90 day period.

This means that even if a redundancy process is already underway when further redundancies are proposed (or perhaps even where dismissals have already occurred), there is a risk that these will be counted within the threshold and the consultation obligations may bite for all the redundancies (both the original batch and the subsequent batch).

Background

The obligation to consult collectively is founded in European law – in the Collective Redundancies Directive (the Directive) – which each EU Member State transposes into its own legislation. In the UK, this is done through the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). TULRCA requires employers who are proposing to dismiss as redundant 20 or more employees at one establishment in a 90 day period to notify the government and engage in a relatively prescriptive collective consultation process.

Facts of the case

In this Spanish case, the Claimant was dismissed by Marclean Technologies in May 2018. During the following 11 weeks, a further 36 employees ceased to be employed by the company.

However, under Spanish law, courts could only look at dismissals taking effect before the Claimant’s dismissal when considering the relevant collective consultation thresholds. Following this would have ignored the fact that 36 employees left the company after her and would have meant the threshold of dismissals was not reached in her case.

The Spanish court asked the ECJ to confirm whether the approach of looking only at dismissals taking place before the dismissal in question was compatible with the Directive.

The decision

The ECJ held that looking only at either the 90 day period before the dismissal in question, or the 90 day period after, does not comply with the Directive. It held that the 90 day period is any 90 consecutive days including the dismissal in question. In effect, it is therefore a rolling 90 day period that could incorporate both a period before and a period after the dismissal.

It also held that the intention of the employer is irrelevant for these purposes. It does not matter whether the employer intends to make further dismissals within the 90 day period. Instead, courts must look at whether the employer did in fact make other dismissals in the period.

Comment

The ECJ’s ruling could be very problematic for employers to put into practice. Redundancy processes that are already underway when further redundancies are proposed (or perhaps even where dismissals have already occurred) may need to be counted within the threshold and the consultation obligations may bite for all the redundancies (both the original batch and the subsequent batch). It is difficult to see how employers can comply with the obligations to notify the government and to begin collective consultation where dismissals have already taken place. It is also hard to imagine many employers wanting to restart consultation with individuals who, because of further potential redundancies, now count towards the 20 dismissal threshold. Unfortunately, the ECJ failed to provide any guidance to solve this.

Under current UK law, employers can generally ignore dismissals which have already taken place and ignore employees with whom collective consultation has already started in determining whether the 20 dismissal threshold will be crossed in respect of an upcoming redundancy dismissal. In effect, TULRCA treats the 90 day period as forward looking.

This approach looks to be incompatible with the ECJ decision and therefore could lead to claims (including from those recently made redundant due to the impact of the coronavirus). This is particularly concerning given that compensation for failing to comply with TULRCA can amount to an award of 90 days’ pay per employee and that this claim cannot be validly waived by way of settlement agreement.

We will have to wait and see how UK courts deal with this inconsistency between TULRCA and the ECJ ruling but, in the meantime, it would be sensible for employers planning to make any future redundancies to look both forwards and backwards from the proposed dismissal date to decide whether collective consultation is needed.

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