Collective consultation thresholds and group structures: lessons from a large-scale redundancy exercise

Background

In the case of Micro Focus v Mildenhall, the claimant was dismissed for redundancy as part of a wider cost-saving reorganisation within a large international IT group. He brought claims for unfair dismissal and for a protective award, arguing that the employer had failed to comply with its collective consultation obligations.

At first instance, the Employment Tribunal found in the claimant’s favour. It concluded that the employer had been proposing to make 20 or more redundancies within a 90-day period, that collective consultation obligations had therefore arisen, and that no consultation had taken place. It made a maximum protective award. The tribunal also found the claimant’s dismissal unfair, largely because the employer had not properly considered the redundancy pool and because consultation with the claimant was inadequate.

The employer appealed on multiple grounds, including whether the collective consultation duty had in fact been triggered.

EAT decision

The Employment Appeal Tribunal allowed the appeal in part.

On collective consultation, the EAT held that the tribunal had misdirected itself in two key respects. First, it had wrongly relied on European case law to justify “looking backwards and forwards” to aggregate redundancies when deciding whether the duty to consult was triggered. The correct question is whether, at the relevant time, the employer was proposing to make the threshold number of redundancies. That is a forward-looking, factual assessment of what the employer planned, not a retrospective exercise based simply on how many dismissals later occurred.

Secondly, the tribunal had erred by treating the respondent as a “de facto” employer of all UK staff within the group. Collective consultation obligations apply only in relation to employees who have a contract of employment with the employer in question. In a group structure, it is not permissible to aggregate employees employed by different legal entities simply because HR systems or management structures are shared, unless those employees are employed under contracts with the same employer.

The collective consultation findings were remitted to the same tribunal. If, on remission, the duty is found to have arisen, the tribunal will also reconsider the length of the protective award in light of its fresh findings.

However, the EAT rejected the employer’s appeal on unfair dismissal. It upheld the tribunal’s conclusion that the employer had failed to turn its mind to the appropriate redundancy pool and that consultation with the claimant was inadequate because key decisions had been taken before any meaningful discussion. Those findings, and the unfair dismissal outcome, stood.

Learning points

This decision is a useful reminder that collective consultation obligations depend on what an employer is proposing at the time, not on a retrospective headcount of redundancies. Employers should be clear, and able to evidence, when proposals crystallise and how many employees they cover.

It also underscores the importance of respecting legal boundaries within group structures, ensuring the correct employing entity is identified for consultation duties. Separately, the EAT’s endorsement of the unfair dismissal findings reinforces familiar but critical points: employers must genuinely consider the redundancy pool and ensure consultation takes place at a formative stage, with sufficient information to allow employees to engage meaningfully.

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For more information or advice, please contact Matt Verrier in our Employment team.