The Employment Appeal Tribunal has recently published its judgement following the appeal made by the Unions on behalf of 27000 employees made redundant when a major retailer folded in 2008. The claim before the original Tribunal was that the company had failed to consult collectively on the redundancies and that employees were treated differently dependent on whether the store in which they worked employed more than 20 people. Where this was the case the employees were awarded 60 days pay while those in stores with less than 20 employees missed out on this protective award. The Employment Tribunal concluded that the 3000 staff affected by this could not receive a protective award because they were at locations with fewer than 20 employees.

The EAT has overturned the Tribunal decision in a landmark ruling and this now means that those employees of the retailer who worked in stores of less than 20 people are entitled to a protective award for the failure of the company to adequately inform and consult with them. The EAT decision is likely to be binding on Employment Tribunals and could mean that in the future collective redundancies need not be “at one establishment”. The view of the EAT is that these words should be deleted from law as they are incompatible with the statutes aim of protecting employees and the EU Directive of 20 or more redundancies by the same employer within a 90 day period.

This is potentially a significant change to UK redundancy law and could create immediate problems for employers who are about to begin or are in the process of making redundancies and have assumed that because there were less than 20 employees involved at one location that collective consultation was not required. In such cases employers could now be at risk from tribunal claims for protective awards and are advised to take legal advice regarding the potential effects of this ruling.

In future this judgement means that employers should seek advice over whether they need to collectively consult with employee representatives where redundancies are taking place across a number of locations even if the number of redundancies is less than 20 in each location. Large multi site businesses will need to monitor and coordinate proposed redundancies and those businesses without employee representative structures should decide whether to put this in place now or wait until a redundancy situation arises.

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