Under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), there is a legal requirement for employers to carry out collective consultation when proposing to dismiss as redundant 20 or more employees at one establishment in a period of 90 days. There is also a requirement that notification is sent to the Secretary of State.
If an employer fails to comply with the collective consultation obligations, they may face a penalty of up to 90 days’ gross pay for each redundant employee – from April 2026 this will increase to 180 days’ gross pay. Failing to comply with the duty to notify the Secretary of State may lead to criminal prosecution.
It follows that it will be important to correctly identify when the collective consultation obligations arise.
Whether an employer must look backwards and count the number of employees it has made redundant in the 90-day period prior to any future redundancy dismissals has been a contentious issue in the last few years since the European Court of Justice (ECJ) decision in UQ v Marclean Technologies SLU [2022]. That case suggested that the number of redundancies in a rolling 90-day period would dictate whether collective consultation duties were triggered. This meant that an employer may be in breach of the collective consultation regime even if a small number of future redundancies was proposed but that took the total over 20, when combined with past dismissals within the rolling 90-day period.
In the case of Micro Focus Ltd v Mildenhall, the Employment Appeal Tribunal (EAT) has, for the first time, addressed the issue.
The case concerned a reorganisation in which Mr Mildenhall had been selected for redundancy. An Employment Tribunal (taking into account the number of redundancies in a rolling 90-day period) found that the collective consultation duties had been triggered and awarded Mr Mildenhall the maximum 90 days’ gross pay.
The employer appealed the finding that the duty to carry out collective consultation had been triggered.
The EAT held that the Employment Tribunal had misdirected itself by applying the ‘forward and backward’ approach that had been established in Marclean. That case had concerned the ECJ establishing the number of ‘collective redundancies’ for the purposes of a claim brought in Spain which had relied on Article 1 of the Collective Redundancies Directive.
Importantly the decision was not about Article 2 of the Collective Redundancies Directive and the provisions of TULRCA which concerned the number of dismissals being proposed.
The EAT clarified that the appropriate test under TULRCA is to look at the number of employees the employer proposes to dismiss in the future and not to look back and include past dismissals that have already taken place in the previous 90 days.
This is an important decision that clarifies the correct approach to assessing when collective redundancy duties apply. The Marclean decision had always been regarded as difficult to apply in practice and, in some regards, appeared to be in direct conflict with the wording of TULRCA. Employers will welcome the EAT decision.
However, care will still need to be taken that a staggered redundancy exercise is not used to try and avoid the statutory collective consultation obligations. It will be possible for an Employment Tribunal to find that an employer ‘proposed’ to dismiss 20 or more employees in the same 90-day period if, at the start of a redundancy exercise, it had attempted to avoid the collective consultation duties altogether by ‘holding back’ on announcing proposed redundancies.
For example, an employer who wishes to dismiss as redundant 25 employees within 90 days but announces 10 potential redundancies and then later announces a further 15 potential redundancies (all proposed to take effect within 90 days of the first announcement) would be in breach of the collective consultation provisions if it did not comply. Conversely, an employer who proposes to dismiss as redundant 10 employees but then later realises that it needs to propose a further 15 as redundant, would not be in breach.
Clearly, documentation would be needed to evidence the employer’s intentions and show that there was no earlier proposal to dismiss the further group of 15 when the initial 10 redundancies were contemplated.
Otherwise, in practice, the safest option would be to ensure that there is a gap of at least 90 days between the two groups of employees being dismissed as redundant.
The EAT also noted that where employees are employed by different legal entities, albeit within the same group of companies, the number of proposed redundancies is not aggregated across group companies. This principle is not new, but is a useful reminder to employers that they should always consider which legal entity employees are employed by when assessing numbers for collective consultation purposes.