UK: Consultation and Collective Redundancies/Stress at Work Revisited

Last Updated: 22 March 2005
Article by Christopher Booth

In one of those cases that will be remembered for its name, Junk, long after the precise decision has been forgotten, the European Court of Justice has ruled that notice of dismissal for redundancy can only be given once the consultation process with workers' representatives has been concluded. The Collective Redundancies Directive is applied in UK law by the obligation to consult representatives of the workforce in good time, and at least 30 or 90 days before the first redundancy takes effect, depending on the numbers involved.

The difficulty comes in deciding when the consultation process is concluded, so that dismissal notices can be issued. The process of the employer giving the required information and then considering the response might take anything from a few weeks to much longer in a complex case. The ECJ in Junk states that the Directive ‘imposes an obligation to negotiate’. What happens if the workforce or union representatives claim that there are still counter proposals to be evaluated and considered, and that therefore the consultation process is still continuing? If an employer issues notices prematurely, the dismissal would be in breach of the Directive.

In German law, where the Junk case originated, a dismissal effected in breach of the obligation to consult is null and void. UK law has always drawn back from such a drastic limitation on management's power to terminate the contract of employment. A dismissal in breach of the obligation to consult will be effective, though it might give rise to a claim for compensation. In practice, the remedy provided by British law is weak: a protective award of up to 90 days' pay per employee. Recent case law has emphasised that the 90 day period should be taken as a starting point, and only reduced if the employer can show good reason for either not consulting or cutting short the consultation process.

Practical implications

The ECJ's decision that the consultation process must be concluded before an employer issues dismissal notices is nothing new - if the purpose of the consultation process is to avoid dismissals and reduce the numbers affected, consultation cannot realistically take place on any meaningful basis if notices of dismissal have already been issued. Some commentators have suggested that the effect of the ECJ's ruling is to require employers to wait 30/90 days after the start of the consultation process before issuing dismissal notices. In our view, this is wrong - there is nothing in the Directive which sets out any 30/90 day consultation period. Nevertheless, this is no doubt an argument that will be raised by unions and employee representatives in the future. Whilst it may be safest to wait 30/90 days after the start of the consultation process before issuing dismissal notices, this seems unnecessarily restrictive. Provided consultation has been genuinely attempted and no issues are obviously outstanding (so that consultation can be said to have been concluded), individual notices of redundancy may still be issued during the 30/90 day period after the start of the consultation process, provided that none of the dismissals takes effect before the end of that period. The ECJ also held that it was necessary to notify the competent authority (in this country the DTI) of the proposed redundancies before issuing dismissal notices but again it was not necessary to wait 30/90 days after notification before issuing dismissal notices.

Stress at Work Revisited

The guidance given by the Court of Appeal two years ago in Hatton, subsequently endorsed by the House of Lords, set out the high threshold faced by employees seeking to recover damages for personal injury consisting of a stress related mental illness. Not only must they show that their illness was caused by stress at work, but they must also show that their illness was foreseeable and that there were steps their employer could and should have taken to prevent it.

A series of cases reported under Hartman illustrates the practical application of these tests, particularly on the issue of foreseeability. In only two cases was the employee successful - in Melville the Home Office was plainly aware of the risk of prison officers suffering mental illness after recovering dead bodies, as it had issued guidance on supporting prison officers in such situations. In Wheeldon, the employer was liable as it knew that the employee's condition was work-related but failed to take steps to avoid a recurrence and failed to act on its own medical advice.

Practical implications

Although it might seem quite difficult for employees to succeed in claims against their employers, employers should still be taking steps to minimise any risk. The Court has again endorsed the desirability of employers offering a counselling service as a practical measure to help avoid liability. In one case, where an employee had not contacted the service because he thought he did not need counselling, the employer escaped liability on the ground that if the employee did not realise he was at risk, neither could the employer. The Court also emphasized that the fact an employer provides a counselling service will not of itself indicate that it has foreseen a risk of psychiatric injury.

Do You Need To Know…?

Dependant Care Leave

Employees have a right to reasonable time off work if it is necessary because arrangements for the care of a dependant have been disrupted. The employee must tell the employer the reason for the absence as soon as reasonably practical. How much information must be given? In Truelove v Safeways, Mr Truelove told his manager that he needed the following day off to look after his child, but not that his babysitting arrangements had fallen through. Holding that he was still entitled to the time off, the EAT accept that not too much can be expected of employees in this situation: ‘the legislation is designed for operation by parents who are faced with a sudden and difficult situation affecting their child. They cannot be expected to communicate in the language of the statute’.

Restrictive Covenants

A senior sales executive, responsible for 9% of her old employer's turnover, was properly restrained from working for named competitors in the office supply industry for 6 months after leaving her old company. A non-solicitation clause prevented her from approaching old clients, but in addition, the court held, her employer was entitled to protect the confidential information of pricing discounts, customers' requirements and tendering information she had acquired while working there. This could only be done through the non-competition covenant. The covenant itself was reasonable as it only prevented her working for named competitors and this left hundreds of companies who could still offer her employment.

Forthcoming Legislation

The DTI's new list of forthcoming legislation, confirms that most of the collective provisions of the Employment Relations Act 2004 will come into force on 5 April this year. One new right outside the collective field is protection for employees summoned for jury service from dismissal or a detriment. The long awaited TUPE reforms - to ‘clarify’ when TUPE applies - is still in the list for October 2005, but a further postponement would be no surprise.

Cases referred to in this update:

Hatton v Sutherland [2002] 2 ALL ER 1; Barber v Somerset CC [2004] IRLR 475 HL; Hartman v South Essex [2005] EWCA Civ 6 ( inc Wheeldon and Melville); Junk v Kuhnel ECJ C-188/03; Truelove v Safeways EAT 0295/04; Corporate Express Ltd v Day [2004] EWHC 2943

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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