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EVERYDAY LAW: Consultations before layoffs

Cecil McCarthy

EVERYDAY LAW: Consultations before layoffs

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In last week’s article I mentioned that under the Employment Rights Act 2012, the employer must carry out consultations with the affected employees or their representative, where it is contemplated that the workforce of the business of the employer will be reduced by ten per cent or any other significant number, before dismissing an employee for redundancy.
One of the issues that must be considered is what is meant by consultation.
This matter was considered by Justice Levy, QC, delivering judgment for the English Employment Appeal Tribunal (EAT) in the case of Rowell vs Hubbard Group Services Ltd (1995) where he cited the following passage from the judgment of Glidewell L J in the case of R vs British Coal Corporation And Secretary Of State For Trade And Industry ex parte Price And Others [1994]:
“24. It is axiomatic that the process of consultation is not one in which the consultor is obliged to adopt any or all of the views expressed by the person or body whom he is consulting. I would respectfully adopt the tests proposed by Hodgson J in R vs Gwent County Council ex-parte Byant, reported, as far as I know, only at [1988] Crown Office Digest p.19, when he said: ‘Fair consultation means: (a) consultation when the proposals are still at a formative stage;
(b) adequate information on which to respond;
(c) adequate time in which to respond;
(d) conscientious consideration by an authority of the response to consultation.’
“25. Another way of putting the point more shortly is that fair consultation involves giving the body consulted a fair and proper opportunity to understand fully the matters about which it is being consulted, and to express its views on those subjects, with the consultor thereafter considering those views properly and genuinely.”
Justice Levy went on to add: “Though given in a different context than that of employment law, we think the passage offers assistance to employers when they have to consult with staff in the context of dismissal for redundancy or dismissal.
“There are no invariable rules as to what is to be done in any given situation; everything will depend on its particular facts. However, when the need for consultation exists, it must be fair and genuine, and should, we suggest, be conducted so far as possible as the passage from Glidewell L J’s judgment suggests.”
In Rowell vs Hubbard Group Services the employer, via its managing director, had written two letters in the following terms:
First, a memorandum was sent to all its employees headed “redundancies”. This warned of impending redundancies and provided the employees with 30 days’ notice of the redundancies. It invited applications for voluntary redundancy and it set out generally the criteria that would be used by management in soliciting employees for redundancy.
A further letter was sent confirming the decision to proceed with the redundancies and informing the employees of their termination and the criteria used for the redundancies.
The EAT found that the duty to consult was distinct from a duty to warn and on the facts there was no justifiable reason for the failure to consult.
Another useful statement in respect of the requirement of consultation in a context where an employee is not unionised is that of Browne-Wilkinson J in Freud vs Bentalls Ltd (1982), who said:
“In the particular sphere of redundancy, good industrial relations practice in the ordinary case requires consultation with the redundant employee
so that the employer might find out whether the needs of business can be met in some way other than by dismissal and, if not, what other steps the employer can take to ameliorate the blow to the employee.
“In some cases (though not this one), the employee may be able to suggest some reorganisation which will obviate the need for dismissal; in virtually all cases the employer, if he consults, will find out what steps he can take to find the employee alternative employment, either within the company or outside it.
“For example, in present-day conditions when so many people are unemployed, many employees facing redundancy by reason of the disappearance of their existing jobs are prepared to take other jobs of lower status and commanding less pay.
“Only by consulting the employee can the employer discover whether such an option is open in any given case. Therefore, good industrial relations practice requires that, unless there are special circumstances which render such consultation impossible or unnecessary, a fair employer will consult with the employee before dismissing him.”
• Cecil McCarthy is a Queen’s Counsel. Send your letters to Everyday Law, Nation House, Fontabelle, St Michael.