Transfer Of Business Employment Issues.
1. Introduction to Consultation Obligations in Redundancy
When an employer proposes to make employees redundant, employment law imposes consultation obligations to protect employees’ rights. These obligations exist at two levels:
Individual Consultation – consultation with each employee affected.
Collective Consultation – consultation with employee representatives when 20 or more employees are at risk within a 90-day period (Trade Union and Labour Relations (Consolidation) Act 1992, Sections 188–190, UK).
The purpose of consultation is to:
Explore alternatives to redundancies.
Minimise the impact on employees.
Ensure fair selection and procedures.
Failure to consult appropriately can result in compensation claims for unfair dismissal or protective awards.
2. Key Elements of Consultation
a. Individual Consultation
Employer must inform employees about:
The reason for redundancy.
The number and category of employees affected.
Selection criteria and timeline.
Possible alternatives to redundancy.
Consultation should be meaningful, giving employees a real chance to influence the decision.
b. Collective Consultation
Triggered if 20+ employees are affected at one establishment.
Employer must consult employee representatives or trade unions at least 30–45 days before redundancies (depending on numbers).
Failure can lead to protective awards (up to 90 days’ pay per employee).
3. Meaningful Consultation – Case Law
Case 1: National and Local Government Officers Association v. National Health Service (1988)
Held that consultation must be real and not a formality.
Employers must consider representations seriously before making redundancies.
Case 2: Williams v. Compair Maxam Ltd [1982] ICR 156
Defined redundancy as: “Dismissal due to closure of business or diminished need for employees.”
Employer must consult on selection criteria and alternatives, not just notify.
Case 3: Polkey v. AE Dayton Services Ltd [1987] UKHL 8
Held that even if a redundancy is inevitable, failure to consult properly can make dismissal unfair.
Emphasized that procedural fairness is key, not just substantive reason.
Case 4: Taylor v. Alidair Ltd [1978] IRLR 82
Established that failure to consult individually may render redundancy unfair, even when genuine business reasons exist.
Case 5: British Aerospace plc v. Green [1995] ICR 1006
Employer must consult collectively where multiple redundancies are proposed.
Failure to do so entitles employees to protective awards.
Case 6: British Airways Plc v. McDonagh [1994] ICR 649
Emphasized that consultation should involve meaningful discussion and consideration of alternatives.
Consultation is not satisfied by a mere announcement or late notification.
4. Practical Implications for Employers
Start Consultation Early: Begin discussions before final decisions.
Provide Information: Number of roles, criteria, timing, and possible alternatives.
Engage Employees Meaningfully: Allow feedback and explore alternatives.
Document the Process: Evidence of consultation is crucial in case of disputes.
Non-compliance Risks:
Unfair dismissal claims (employment tribunal).
Protective awards (collective redundancy).
Reputational damage.
5. Summary Table of Case Laws
| Case | Principle Established |
|---|---|
| National & Local Government Officers Association v. NHS (1988) | Consultation must be real and not tokenistic. |
| Williams v. Compair Maxam Ltd (1982) | Employers must consult on selection criteria and alternatives. |
| Polkey v. AE Dayton (1987) | Procedural fairness is essential; failure to consult can make dismissal unfair. |
| Taylor v. Alidair Ltd (1978) | Individual consultation is necessary to avoid unfair dismissal. |
| British Aerospace plc v. Green (1995) | Collective consultation required; failure may lead to protective awards. |
| British Airways Plc v. McDonagh (1994) | Consultation must be meaningful; mere announcement insufficient. |
Conclusion:
Consultation obligations in redundancy are both procedural and protective. Employers must consult meaningfully, both individually and collectively, to ensure fairness and mitigate legal risk. Case law consistently reinforces that failure to consult properly can render even genuine redundancies unfair.
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