10th April 2012

Were the US authorities trigger happy?

When is there a need to collectively consult? 

Where an employer proposes to make 20 or more employees redundant within a period of 90 days or less, it must consult on its proposal with representatives of the affected employees. 

When should such collective consultation commence? 

The legislation states that this obligation to consult must begin “in good time.”  The Advocate General recently provided some guidance as to the meaning of this legislation. 

What were the circumstances surrounding the Advocate General’s recent guidance?

Ms Nolan was employed at a military base in Southampton.  A decision to close the base was communicated by the Secretary of the US Army on 13 March 2006.  This decision was reported by the British media on 21 April 2006.  The commanding officer of the base apologised to Ms Nolan and others at a meeting on 24 April 2006 for the way in which the news about the closure had been made public.  The US authorities advised the workforce representatives on 14 June 2006 that the starting date for the consultations had been 5 June 2006. 

What was the question put to the Advocate General? 

Does the employer’s obligation to consult about collective redundancies arise:

  1. when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or
  2. only when that decision has actually been made and the employer is then proposing the consequential redundancies? 

What was the Advocate General’s response?

Neither.  The Advocate General has stated that an employer’s duty to conduct consultations with the workers’ representatives arises when a strategic or commercial decision which compels it to contemplate or to plan for collective redundancies is made by a body or entity which controls the employer. 

Does this recent guidance assist employers in understanding the legislation?

In Ms Nolan’s case, the decision to close the base was made by a separate entity from the direct employer which slightly limits the usefulness of this guidance for employers who are not governed in this way.  However arguably this does suggest that employers do not require to consult with the workforce when reaching the commercial decision as to whether to close the business and, instead, the requirement to consult only commences after this decision has been reached. 

Nevertheless this guidance does indirectly reinforce the requirement for an employer to meaningfully consult with its workforce during a redundancy process.

Simon Allison
Partner – Employment Law

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