Employers will find some comfort in the Employment Appeal Tribunal ("EAT") judgment in Micro Focus Limited v Mildenhall ("Mildenhall"). This is particularly timely clarification as the penalty for getting collective consultation wrong is set to double from 90 to 180 days gross pay per affected employee from 6 April.
Background
When an employer proposes to dismiss 20 or more employees as redundant at one establishment within a 90-day period, employers must collectively consult with trade union representatives or employee representatives. This requirement arose from an EU law obligation that was given effect domestically via the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULRCA"). Over the years since the requirement was introduced, a commonly disputed issue has been which dismissals should count towards the 20-employee threshold.
In 2020 the European Court of Justice in UQ v Marclean Technologies SLU ("Marclean") issued a judgment relating to collective redundancy consultation. It was widely interpreted by employment tribunals as introducing a rolling reference period for assessing whether collective consultation was triggered. The practical effect was that employers had to look both backwards from the date an individual was made redundant as well as forwards up to a maximum of 90 days in either direction. The employer then took the 90-day period that encompassed the highest number of redundancy dismissals and, if it hit 20 or more, the obligation to collectively consult was triggered.
Judgment in Mildenhall
The claimant in Mildenhall was dismissed by reason of redundancy in July 2022. His redundancy dismissal took place within a 90-day period where 20 or more redundancies were, he argued, proposed by Micro Focus. The redundancy proposals arose at different times within that 90-day period and some of the affected employees worked for different group companies. The claimant brought claims for unfair dismissal and for a protective award (i.e. for failure to collectively consult). At first instance both claims succeeded with the current maximum protective award of 90 days' pay being made.
In coming to its conclusion, the employment tribunal found that Micro Focus was the de facto employer of employees even though they worked for other group companies. It included the de facto employees in calculating whether the 20 or more trigger was hit. It also interpreted Marclean as stating that there is an obligation to look backwards as well as forwards when assessing whether the employer is caught by collective consultation obligations.
When Micro Focus appealed to the EAT they were partially successful. The EAT agreed with the employment tribunal that the dismissal was unfair. Micro Focus should have included another employee in the pool of those at risk of redundancy and individual consultation with the claimant was inadequate. However, it found that the employment tribunal had misdirected itself regarding the de facto employment of employees in other group companies and its interpretation of the Marclean judgment.
The employment tribunal should, according to the EAT, have asked itself whether Micro Focus was proposing to dismiss 20 or more employees employed under contracts of employment with it. Had it done so, that could impact on its conclusion that the trigger point for collective consultation was reached.
In terms of Marclean, the EAT concluded that the issue before the ECJ had not been whether the employer was contemplating collective redundancies. The issue had been about the meaning of collective redundancies and whether the correct number had been affected. Under TULRCA, collective consultation is triggered by what the employer is proposing. Whether an employer subsequently dismisses as redundant more or less than 20 employees or whether that happens in less or more than 90 days does not impact whether the duty to collectively consult arises. What matters is what was proposed within a period of 90 days.
What does this mean for employers?
The EAT judgment in Mildenhall suggests that employers can stop looking over their shoulders at past redundancies when considering whether the obligation to collectively consult arises. Looking backwards as well as forwards is impractical and would potentially catch out employers with no intention of avoiding statutory consultation obligations. It should not though open the door to less scrupulous employers staging redundancies to avoid those obligations. Each case will turn on its own facts. Where a second (or further) round of redundancies takes place that, if they had been part of the original proposal, would have triggered collective consultation obligations, employers can expect to have their decision-making processes closely scrutinised.
