Renfrewshire Council v Educational Institute of Scotland EATS/0018/12
redundancy | collective consultation | meaning of "establishment"
The Employment Appeal Tribunal (EAT) has provided a reminder of how "establishment" should be defined for the purposes of consulting collectively on redundancies under s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992.
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Implications for employers
- This decision provides some useful guidance for employers on the scope of the relevant unit when deciding if the duty to consult on 20 or more collective redundancies at one "establishment" is triggered.
- In most cases, an "establishment" is likely to be less than the whole undertaking of the employer concerned.
- Practical issues such as where the employee works and the likelihood of the employer asking the employee to move will often determine the issue.
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This case involves an appeal against a preliminary ruling by the employment tribunal in a claim brought by teachers that their employer had failed in its duty to consult collectively with them on redundancies. The preliminary issue for the tribunal was whether or not, for the purposes of triggering the duty to consult collectively under s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992, the employer was proposed to make redundant 20 or more employees at one "establishment".
The employment tribunal had to decide whether an "establishment" in this case was:
- an individual school;
- all the secondary and primary schools in Renfrewshire; or
- the education and leisure service of Renfrewshire, to which no particular location was ascribed.
The teachers succeeded at a preliminary hearing in convincing the employment judge that the employer's education and leisure service department was the relevant unit.
In overturning the employment tribunal decision, the EAT made a number of general observations about how "establishment" should be defined under s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992. The EAT noted that the tribunal had approached the case by treating the school "in the abstract". The EAT had real concerns about any decision dealing with what should be essentially the practical matter of consulting in specific circumstances that is reached without identifying the precise units to which the council claims the employees were assigned.
The EAT stressed the following points arising from domestic legislation:
- While there is no statutory definition of "establishment", it is likely in many, if not most, circumstances to be less than the whole undertaking of the employer concerned. If this was not the case, there would be no need to engage the concept of "establishment" at all. It would be sufficient for the statute to omit the words "at one establishment" from s.188 if it was intended that the headcount should be performed across the whole of the employer's workforce.
- Parliament did not provide for a right to consultation in the event of large-scale redundancies generally. However desirable that may be, there is no right unless the impact of such redundancies on individual establishments within the employer's organisation meets the numerical threshold under s.188.
- "Establishment" implies a physical presence. Although the word can be used in an organisational sense (as in "the establishment of the company"), it does not conventionally have an organisational thrust.
- In light of Rockfon A/S v Specialarbejderforbunet i Danmark, acting for Nielsen and others [1996] IRLR 168 ECJ, it has become accepted wisdom that the same definition of "establishment" applies to both s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 and art.1(1)(a)(i) of the Collective Redundancies Directive (98/59/EC).
Applying these principles to the present case, the reasons for the EAT overturning the tribunal decision included the following:
- The inclusion of a mobility clause in the teachers' contracts of employment, which in practice had never been enforced, was not determinative of the employees being part of a larger unit. There were limits on where the teachers could be moved, particularly with teachers transferable to a new location only if it was "deemed to be reasonable".
- The emphasis given by the employment judge was not to the place where teachers did their work, but rather to the place from which many aspects of their employment were controlled. Any employer having distinct establishments will inevitably have a degree of central control but, where an establishment is less than the whole undertaking of which it is part, there must still be sufficient links between it and other establishments forming parts of the undertaking for it to be recognised as a part of a larger whole.
- The employment tribunal concentrated too much on the respective powers on overall organisational matters of, on the one hand, the employer (through its education and leisure service) and, on the other hand, a school. The approach should be employee- not employer-focused. The two central questions are: is the postulated unit capable of being an establishment and, if so, is the employee assigned to it?
The EAT remitted the case to the employment tribunal to make the "simple and stark" choice as to whether or not it was the school or the education and leisure service to which the teachers were in fact assigned to perform their duties, rather than concentrating too closely on whether or not the employer could appoint, dismiss and control staff.
Additional resources
Case transcript of Renfrewshire Council v Educational Institute of Scotland (on the BAILII website)
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