Collective Redundancy Consultation – Court of Appeal Seeks Clarification | DFA Law Northampton Solicitors News

The Court of Appeal (in United States of America v Nolan) has sought guidance from the European Court of Justice (ECJ) as to the point at which the obligation to consult arises under Directive 98/59/EC, the Collective Redundancies Directive.

This issue has caused problems in the past and clarification will be welcome. Whilst the Directive provides that an employer should begin consultations when ‘contemplating’ making collective redundancies, this duty is given effect in domestic law – under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) – as being a duty to consult when an employer ‘proposes to dismiss’ employees as redundant.

The question arose in this case following a decision by the Secretary of the US Army to close a US Army base in Hampshire, which resulted in the redundancy of some 200 civilian employees. One of the employees, Christine Nolan, brought a claim on behalf of the redundant employees for compensation by way of a ‘protective award’ under TULRCA on the ground that the USA had failed to consult with representatives of the civilian workforce in accordance with its obligations under section 188. She argued that the consultation period was far less than the 90-day period required and, in particular, that there had been a failure to consult before, and about, taking the operational decision to close the base.

The Employment Tribunal found that no meaningful consultation over the closure of the base, and the redundancies this would involve, had taken place and awarded Mrs Nolan a 30-day protective award. The Employment Appeal Tribunal upheld this decision, relying on the decision in UK Coal Mining Ltd. v National Union of Mineworkers that where closure and dismissals are inextricably linked, the duty to consult over the reasons for the closure arises.

The USA appealed to the Court of Appeal on the ground that the more recent judgment of the ECJ in a Swedish case (Akavan Erityisalojen Keskusliitto Alek RY and others v Fujitsu Siemens Computers) is authority for the proposition that, upon the true interpretation of the Directive, the consultation obligation is not triggered by a proposed business decision to close down a workplace but only arises at the later stage when the decision has been made and the intention to make the employees redundant has been formed.

The Court of Appeal chose not to venture further views on the correct interpretation of the Directive, concluding that it could only decide the appeal with the benefit of further guidance from the ECJ. Furthermore, this is an important issue as employers need to understand the exact nature of their consultation obligations in such circumstances.