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Redundancy Procedures - ECJ Confirms Legitimacy of Focusing on 'Establishment'

on Tuesday, 14 July 2015.

Under UK law, where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, they are obliged to inform and collectively consult with affected staff.

Failure to do so can result in redundancy procedures being found to be unfair and also a penalty of up to 13 weeks' pay for each member of staff.

In 2013 the Employment Appeal Tribunal (EAT) held that the words 'at one establishment' were incompatible with the European directive from which the obligation derived and should therefore be disregarded.

For employers with multiple outlets or locations, the EAT's decision effectively entailed a requirement to aggregate proposed redundancies across the whole organisation. If an employer proposed to make 20 cumulative redundancies across the whole of the organisation, the obligation to inform and collectively consult would be triggered. For schools that were part of a group or with operations across different locations this was a particularly problematic decision.

The European Court of Justice (ECJ) has now considered this in USDAW v VW Realisation 1 Ltd.  Much to the relief of employers, the ECJ has confirmed that, for the purposes of collective redundancy consultation, it is still appropriate to consider the numbers of staff likely to be affected at a particular 'establishment' (rather than across the whole of the organisation).  For these purposes 'establishment' means the entity to which workers are assigned. This does not need to be a standalone operating unit and will usually be based on workers at a particular location.

Best Practice

This decision can give schools confidence that when undertaking redundancies it can treat different schools as different establishments.

Unless 20 or more redundancies are contemplated at a single school, the duty to collectively consult is unlikely to be triggered.

This is likely to make redundancy procedures much more straightforward. However, caution will still need to be exercised where staff work across different schools, or could be required to do so under their contracts of employment.  Schools are also still obliged to consider whether there are any alternative vacancies across the organisation as an alternative to making an employee redundant.

For more information, please contact Naseem Nabi in our Academies team on 0117 314 5630.