In a bold and controversial move, the Employment Appeal Tribunal (EAT) has decided to re-write UK redundancy legislation with the result that more employers will be required to inform and consult with elected employee representatives, including trade unions, before they can make redundancies.

Martin Warren, Employment and Pensions Practice Group Head at global law firm Eversheds comments: “This case arose from the mass redundancies following the insolvency of the Woolworths and Ethel Austin companies. Following a failure to consult the employees about the redundancies, employment tribunals awarded the ex-employees compensation but excluded those made redundant in shops where fewer than 20 workers were dismissed. This is because UK law limits the duty to consult to situations where there are 20 or more employees to be dismissed in one establishment.

“On appeal it was argued that the excluded ex-employees should have received compensation because UK law fails to comply with EU law, which it is intended to implement. Specifically, under EU law the duty to collectively consult employees is triggered when there are 20 or more employees potentially redundant across the business, not just at one site. The EAT agreed and decided it had the legal authority to re-write the law to delete the reference to one establishment in order to apply EU law.

“Many observers will be surprised that the EAT can substantially move the goalposts for employers without the involvement of Parliament or the European Union, and this reflects how legal authority has quietly evolved in recent years to warrant this approach. In practical terms, it means that large multi-site employers must act to track closely the numbers of potential redundancies across all sites to ensure the collective consultation trigger is not missed. With the penalty for getting this wrong potentially running into millions of pounds, employers need to get this right.”