When must consultation begin?
Consultation must take place “in good time”. For proposals to dismiss as redundant 100 or more employees at one establishment over a period of 90 days or less made on or after 6 April 2013, consultation must begin at least 45 days before the first redundancy dismissal takes effect. If the numbers involved are more than 20 but fewer than 100 (again within 90 days or less), the minimum consultation period is reduced to 30 days.
The reduction of the consultation period from 90 to 45 days for dismissals of 100 or more employees became law on 6 April 2013.
These are minimum consultation periods. Sometimes employers should start consultation earlier than that. They should not wait until the statutory clock starts ticking (Elkouil v Coney Island [2002] IRLR 174). Even if the employer is looking at two options and only one of them involves redundancies, there is still an obligation to consult (Scotch Premier Meat v Burns [2000] IRLR 639).
“Proposing” to dismiss requires a state of mind that is much more certain, and further along the decision-making process, than “contemplating”. This means that there is no statutory obligation under TULRCA to consult before the employer has formulated its own proposals (MSF v Refuge Assurance [2002] IRLR 324, followed in Kelly v The Hesley Group Limited [2013] UKEAT/0339/12/ZT). Even so, consultation must take place when proposals are still at a “formative stage”, so that the union can genuinely exercise its influence and has time to respond to proposals and make counter-suggestions (Amicus v Nissan Motor Manufacturing (UK) Ltd EAT/0184/05).
In UK Coal Mining Limited v National Union of Mineworkers (Northumberland Area) [2008] ICR 163, the EAT ruled that the obligation to consult collectively is triggered as soon as there is a clear (albeit provisional) proposal (for example, to close a plant) which would almost inevitably result in redundancies (as opposed to when a strategy such as closure is merely “mooted as a possibility”). This is an inevitable result of the statutory need to consult on “ways of avoiding dismissals”:
Ellington Colliery was closed after water began to rise quickly at a coal seam. Two weeks later, management told NUM reps the mine needed urgent closure on safety as well as economic grounds. A report revealing that the water posed no safety risk was withheld from the union and 158 men were made redundant following minimal consultation on peripheral issues like alternative employment opportunities and redundancy pay.
The EAT held that the employer’s duty to consult about ways of avoiding the dismissals inevitably meant engaging with the union about the underlying reasons for the dismissals. This, in turn, meant that the employer should have consulted with the union over the decision whether or not to close the mine in the first place.
A protective award of 90 days’ pay was awarded because the company deliberately set out to mislead the union as to the real reason for the dismissals, and engaged in limited consultation over marginal issues.
UK Coal Mining Limited v National Union of Mineworkers (Northumberland Area) [2008] ICR 163
This key issue for trade unions resurfaced in United States of America v Nolan:
The US army decided to close its Hythe base with the loss of 200 civilian jobs, but it did not start consulting with the civilian workforce until it had already taken the strategic decision to close the base. Reps claimed a protective award from the US government, arguing that the obligation to consult was triggered as soon as the US government formed a “clear, albeit provisional intention” to close the base.
The Court of Appeal asked the European Court of Justice to rule as to whether the employer is obliged to consult either: (i) before taking a strategic decision likely to result in redundancies, or (ii) after a strategic decision that has led to a need for operational decisions about redundancies to implement the strategic decision. The European Court refused to give a ruling, stating instead that the unique facts of the Nolan case, in particular the involvement of a sovereign State, made it an unsuitable precedent.
United States of America v Nolan [2011] IRLR 40
Based on these cases, reps should approach consultation on the basis that they are entitled to be consulted about strategic decision-making that would lead to redundancies if implemented, and not just on the implementation of the redundancies that follow from the decision.
Note that in some cases the employer will also be obliged to inform and consult reps about economic decisions likely to lead to changes in work organisation or contractual relations under the Information and Consultation of Employees Regulations 2004 (ICE 2004).