A Company's Duty to Consult Staff Before Large Redundancies are Made - Prolegal

A Company's Duty to Consult Staff Before Large Redundancies are Made

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In a case arising out of the Woolworths’ administration, the Employment Appeal Tribunal has confirmed that employers have a duty to collectively consult employees where more than 20 redundancies are being made irrespective of whether this is at different establishments.

Several thousand Woolworths and Ethel Austin employees were made redundant when hundreds of stores closed. Their unions brought claims for protective awards because there was no collective consultation. The Employment Tribunal held that each store was a separate “establishment” and so only those employed in stores with more than 20 employees being made redundant were entitled to a protective award.

The Employment Appeal Tribunal held that this interpretation of the UK legislation would make it inconsistent with EU Directive. Instead, it confirmed that Tribunals should ignore the reference to establishments when considering whether an employer had a duty to consult collectively over redundancies.

This means that whenever an employer is proposing to make 20 or more employees redundant, wherever they work, they must collectively consult either with unions or employee representatives for a minimum of 30 days. Failure to do so can result in a protective award of up to 90 days’ pay per employee and could therefore be very expensive.

Click here for further detail on employers’ obligations when making employees redundant or contact us for specific advice.

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