Trigger for Collective Redundancy Consultation: Back to Square One

The ECJ has refused to rule on the trigger point for starting collective redundancy consultation leaving employers unclear on their obligations.

In United States of America v Nolan, the employer sought to establish whether the Collective Redundancies Directive (“the Directive”) requires consultation about the business reasons for redundancies (in this case the decision to close a military base) or whether collective consultation obligations are only triggered once that decision has been made and consequential redundancies are being proposed.

The Advocate General gave his opinion in this case earlier this year which did not clarify the position.  It had therefore been hoped that the ECJ ruling would shed more light on this question.  However, instead the ECJ has decided that it does not have  jurisdiction to decide the question in this case because the Directive does not apply to employees of public administrative bodies.  Since the armed forces fell within the definition of public administration, the civilian staff employed at the base were not covered. 

Although there is an exclusion in the Collective Redundancies Directive for employees of public administrative bodies, there is no similar exclusion in the UK collective redundancy provisions in s188 Trade Union and Labour Relations (Consolidation) Act 1992.  This means that the court in this case will now have to decide this question without the ECJ’s  assistance. 

Current UK Court of Appeal authority (UK Coal Mining v National Union of Mineworkers) requires an employer to consult about the business reasons for redundancies, meaning that collective redundancy consultation has to commence early in the process.  However, ECJ case law (Akavan Erityisalojen Keskusliitto AEK ry and others v Fujitsu Siemens Computers Oy) suggests that the obligation may arise at a later stage (once the commercial decision has been taken) but that decision has been criticised for being unclear.  The ECJ’s refusal to decide the issue in this case means that clarification will unfortunately have to await another day.  In the meantime, UK tribunals deciding  protective award claims will have to follow the Court of Appeal decision in UK Mining and consider whether the employer has consulted about the business reasons for redundancies.  Employers who fail to do so risk a protective award being made of up to 90 days’ full pay per affected employee.