Businesses Looking For Clarity On Key Redundancy Issue

A landmark employment law case which relates to an employer’s obligation to consult with staff when it is looking to make 20 or more staff redundant will be heard in the Court of Appeal on Monday 18 November 2013.

The USA v Nolan cases focuses on the trigger point for when a business should enter into collective consultation, as well as providing guidance on how much information a business must provide when consulting with representatives.

The case involving Ms Nolan was initially passed to the Court of Appeal (CoA) after she succeeded in claiming that the US Government had not consulted with her properly when they made her redundant from a US military base in the UK.

The CoA sought clarity on the correct interpretation of the European Collective Redundancies Directive from the European Court of Justice (ECJ). The CoA asked for guidance in relation to whether an organisation needs to begin consultation at an early stage – when it is merely thinking about changes which might result in redundancies, but has not yet made a final decision, or at a later point when it has made a final decision to reduce headcount.

The case has returned to the CoA because the ECJ said it was not able to determine this issue due to a complex exclusion in the Directive relating to employees of public administrative bodies.

Following the hearing on 18 November, a final decision is expected in 2014.

The case comes at a time when a number of companies in the UK have announced large scale headcount reductions. In the past week, Barclays has said that it will be cutting 1,700 branch jobs, while BAE also said it would be reducing employee numbers by 1,775 over the next three years.

Expert Opinion

This case is very significant for businesses as the outcome will provide clear guidance as to when an employer is obliged to consult on collective redundancies for 20 or more staff and crucially what information the employer has to provide. <br/> <br/>“The Directive requires businesses to consult when redundancies are ‘contemplated’, however this wording is not replicated in the UK law, which instead requires consultation to start when redundancies are ‘proposed’, in other words where there is an intention to make redundancies. The word ‘contemplated’ has been interpreted as meaning that consultation must begin at an earlier stage and should enable the parties to examine the operational reasons for the redundancies, which can be an onerous and contentious task. <br/> <br/>“It is a complex area of law and it is hoped that the outcome of this case will finally provide some clarity for business on what has been a troubling issue <br/>