How does EU law affect collective redundancies?

EU law affects collective redundancies through the Collective Redundancies Directive (98/59/EC). This Directive requires employers in Member States to enter into a consultation with employees whenever multiple redundancies are being considered. This is part of employment law in the UK. The Directive was implemented in the UK by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Redundancy is defined in TULRCA as ‘any dismissal for a reason or a number of reasons all of which are not related to the individual’.

TULRCA applies when an employer is considering the redundancy of 20 employees or more within a period of 90 days. The employer is obligated to enter into a consultation with these employees or their trade union representatives. The consultation must cover ways of avoiding the redundancies, ways of reducing the total number of redundancies, and ways of mitigating the effects of the redundancies. Legal advice is important to have available during these negotiations, not only during the decision over an employee’s redundancy entitlement. Employment law solicitors can ensure the best interests of all parties are met.

TULRCA requires the consultation process to be completed before the employees are made redundant. This requirement is supported by the European Court of Justice (ECJ) in a recent case (Akavan Erityisalojen Keskulitto Aek ry v Fujitsu Siemens Computers) that was forwarded to the ECJ by the Supreme Court of Finland. In addition, this case clarified the duty of employers to consult when considering collective redundancies. An employment law lawyer can fully explain the legal implications of this case.

The ECJ stated that the duty to consult is triggered when strategic decisions are adopted, or changes in activities are adopted, which compel the employer to contemplate or plan for redundancies. Therefore, consultation is required when there is an intention to make redundancies, even if the employer is contemplating other options. If redundancy is an option, legal advice should be sought as soon as possible. Employment solicitors can offer help, advice and representation with any subsequent negotiations that take place, such as over an employee’s redundancy entitlement.
The case clarified the position for group companies and stated that if a parent company makes a decision to implement redundancies, the duty to collectively consult lies with the subsidiary where the employees are employed. In addition, the ECJ stated that it is not necessary to have all the information at the beginning of the consultation, but that it should be supplied to the employees as it becomes available.

If an employer fails to collectively consult employees in accordance with TULRCA, they can claim against them in an Employment Tribunal. An Employment Tribunal can award a protective award of up to 90 days pay. An employee who has been made redundant in a collective redundancy should seek legal advice from an employment solicitor, to ensure that the required consultation was carried out correctly by their previous employer, and to ensure they receive their rightful redundancy entitlement.