Do you know about the new EU ruling on redundancy consultations? There’s lots of discussion about what this means for businesses.
In other news, small businesses met large corporations to address poor payment practices and there’s been a slowdown in hiring as employers struggle to find the right people for the job.
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The EU rules on redundancy regulations
UK businesses may not have to include all staff in consultations if there are fewer than 20 employees in one location.
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What the EU ruling on redundancy means for your business
The EU ruling on 5 February could change the way redundancy is managed by businesses.
The UK rules state that collective consultation only apply where there are 20 or more redundancies “at one establishment”. But the term “establishment” is unclear, as it was not obvious if that represented the company as a whole or individual workplaces.
Nils Wahl, Advocate General of the Court of Justice of the European Union, said that the term "establishment" is "the unit to which the workers made redundant are assigned to carry out their duties". That could include an individual office, shop or other location.
This means that employers would not be obliged to consult about redundancies across multiple branches or “establishments”, unless there are 20 or more affected staff in the same location.
Mr Wahl also endorsed the recent change in the UK that meant redundancies at the end of fixed-term contracts wouldn’t be included in collective consultation and wouldn’t count towards the threshold of 20 employees.
Why did the ruling happen?
Following the closure of Woolworths, some staff in smaller branches weren’t included in consultations and didn’t receive compensation. They argued this was unfair but officials said that the individual shops counted as one “establishment”.
The case went to the Employment Appeal Tribunal, who ruled that employers must consult with all affected staff whenever they planned to make 20 or more redundancies within 90 days, regardless of how many staff were in a location.
But this was appealed and the case was referred to the Court of Justice of the European Union where the new ruling was made.
What does it mean for my business?
Before you change your redundancy policy, it’s important to note that this ruling is non-binding. However, courts do tend to follow rulings in most cases.
However, Mr Wahl was clear that the definition of an "establishment" was to be set by the national courts, which means that the UK government will need to create a definitive definition.
At the current time, many legal advisors are recommending that consultations still occur where there are more than 20 staff at risk of redundancy, regardless of the number in each location.
However, if the new ruling does apply in the future, then it will be easier for businesses to manage redundancies across multiple locations. We’ll keep you informed as more information is available.