Collective consultation triggers and redundancy: do you count previous dismissals within 90 days?

It's been long established that you must collectively consult appropriate representatives if you are proposing to make 20 or more employees redundant within a 90 day period. But what should you do if you make a few people redundant in say, March and then decide, six weeks later to make further redundancies? 

It's clear that if the combined number of people you are likely to make redundant within that 90 days window is 20 or more, it will trigger the duty to collectively consult. That raises a difficult question: what can you do about the first group if you've already dismissed them? Will your failure to collectively consult about that group mean they are likely to be awarded a protective award? That was one of the issues the EAT had to decide in Micro Focus Ltd v Mildenhall.

Facts

Mr Mildenhall worked in a large international IT company. His employer needed to cut costs and announced a large-scale reorganisation in September 2021. 

Mr Mildenhall was selected for redundancy by his line manager without being pooled with another employee. He alleged he had been unfairly dismissed and should receive a protective award because his employer had failed undertake any form of collective consultation despite the fact that at least 45 employees engaged within the group of companies had also been put at risk of redundancy. 

The tribunal upheld his claims. Following a decision of the CJEU in 2022 in the case of UQ v Marclean Technologies the tribunal said that employers must look both backwards and forwards for 90 days to determine whether there are sufficient redundancies to trigger the collective consultation obligations under s188 TURCA. 

Applying that principle to these facts, it said that the employer was “not keeping track of the number of employees potentially affected by its redundancy proposals”. It should have collectively consulted appropriate representatives from January 2022 - as that was the date when its decision to make at least 45 employees crystalised. It concluded that the employer was responsible for this breach as it was the de-facto employer of all the group's UK staff. 

It awarded Mr Mildenhall 90 days pay (the maximum) on the basis that the company did not:

• collectively consult with the appropriate representatives; or
• have a genuine and reasonable belief that it hadn't hit the threshold to trigger collective consultation.

Mr Mildenhall was also unfairly dismissed. His employer should have included another employee in a pool before deciding who to dismiss, and it had reached this decision “behind closed doors” and presented it to him as a fait accompli. There was no meaningful consultation and he hadn't been given enough information about why he had been selected to enable him to respond.

The employer appealed on a number of grounds. 

Decision of the EAT

1. Had the threshold triggering collective consultation been reached? 

The EAT said the tribunal had misinterpreted Marclean. It was a case about when dismissals took place - how many were “effected” - not when they were proposed. The language of s188 does not define collective redundancies by reference to the number of dismissals which have been “effected”. Instead it looks at whether an employer is proposing to dismiss as redundant 20 or more employees within 90 days. That is determined by looking at the employer's plans and s188 is triggered even if fewer than 20 employees are actually dismissed:  

‘It cannot simply be deduced from the fact that 20 or more dismissals occur within any period of 90 days that the employer … was or must have been “proposing” those dismissals. For example, a second tranche of dismissals may be proposed more than two months after a first tranche, and the second tranche may result from events that were entirely unforseeable when the employer made the first tranche. To contend that, viewing matters in the light of later events, the employer was “proposing” all the dismissals when it proposed the first tranche is to stretch “proposing” beyond its breaking point.’

A tribunal cannot determine whether the threshold conditions have been met simply by looking at the total number of employees who have been dismissed (or proposed to be dismissed), within 90 days regardless of the circumstances. 

It remitted this point back to the same tribunal to decide whether the threshold had been met. 

2. Did the respondent employ all of the staff put at risk of redundancy?

The EAT also said the tribunal was wrong to refer to Micro Focus Ltd as the "de facto" employer of the individuals at risk of being made redundant. For the relevant provisions of TULRCA to apply, there needed to be a contract between an employee and an employer. In the context of a corporate group there had to be a contractual link between the employees at risk of being made redundant and the employer required to collectively consult. 

The tribunal did not, therefore, ask the right question: was this employer proposing to dismiss 20 or more employees employed under contracts of employment with it. The answer to that question was not clear because there was evidence that some employees, put at risk, might have been employed by different legal entities.  

3. Was the amount of the protective award just and equitable? 

The EAT also said that the tribunal would be able to re-calculate the amount of the protective award payable to Mr Marclean if its new findings merit it. 

Comment

This is the first binding decision on the applicability of Marclean for UK law. Several tribunal decisions have interpreted it as requiring UK employers to look both backwards and forwards from an individual dismissal to count whether 20 or more redundancies have occurred within 90 days, under s188. That approach is incorrect. S188 is, essentially, forward looking and is based on the employer's plans at the relevant time. 

That doesn't mean that a tribunal will ignore what actually happened. It will scrutinise the evidence to determine whether an employer has artificially created batches of redundancies to circumvent s188. As the EAT said, “dismissals do not happen by accident” and tribunals should be astute enough to see through artificial batches, deliberate delays and staggered dismissals. 

‘… a tribunal may legitimately infer an employer was at some stage ”proposing" sufficient collective dismissals to trigger the duties from the fact of their subsequent occurance.’ 

We recommend that you record, in writing, your reasons for making redundancies and why you have decided to make additional redundancies within that 90 day period, to demonstrate that you are not trying to game the system. Ideally, these records should be written at the time you make these decisions. That will help you dispel any accusations that your decisions have been retrofitted.  

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