Timing of redundancy consultation
Could a more stringent interpretation of consultation "in good time" result in a fairer approach to redundancy, asks consultant editor Darren Newman.
This week's key theme is consultation - specifically the consultation of employee representatives in the context of collective redundancies. Consultation is at the heart of good employment practice, as well as being the subject of extensive regulation. But to what extent do employers really consult with employee representatives when large-scale redundancies are in the pipeline?
The neatest definition of consultation was set out in R v British Coal Corporation and Secretary of State for Trade and Industry ex parte Price and others1. In the context of a duty for British Coal to consult over pit closures, the court confirmed that consultation must take place when the proposals are still at a formative stage; the employer must give the representatives adequate information on which to respond and adequate time in which to respond; and the employer must give conscientious consideration to the representatives' response to that information.
In my experience, employers are very good at giving information to representatives and listening to their response. However, nearly every employer I talk to will reluctantly admit that, by the time consultation begins, a final decision has already been taken on the most important issues. While there may be room for manoeuvre on certain side issues and "token" areas of negotiation, the key issues - such as the number of redundancies to be made - have been firmly decided before any consultation begins.
But, however ritualistic the process may be, it is important for employers not to be blasé about the need to consult, and to pay close attention to the statutory requirements. The case of Leicestershire County Council v Unison illustrates that the penalty for non-compliance with the statutory rules on redundancy consultation can be severe. Here, the Court of Appeal upheld the tribunal's finding that a failure to consult merited a 90-day protective award for a group of employees. This was so even though the employer had conducted extensive negotiations with the union before formulating the proposal to dismiss and re-engage employees that gave rise to the duty to consult.
An interesting issue that arose - although too late to persuade the Court of Appeal to hear argument on it - was whether or not the statutory requirement to consult representatives "in good time" meant, as the tribunal said, that consultation had to begin soon after the proposal to make redundancies was first formulated by the employer. In the Court of Appeal, the employer sought to argue that the requirement to consult "in good time" meant that consultation must begin well in advance of any actual redundancies.
It seems to me that the employer's argument best fits with the words of the statute. The phrase "in good time" is found in s.188(1A) of the Trade Union and Labour Relations (Consolidation) Act 1992, which goes on to say "and in any event" at least 90 (or 30) days "before the first of the dismissals takes effect". This certainly seems to imply that the correct approach to determining whether or not the consultation began "in good time" is to look at how long before the dismissals it started.
However, the approach taken by the tribunal would certainly help with the central problem of consultation - that employers have essentially made up their mind before consultation begins. If employers knew that the clock was ticking as soon as a working proposal was reached - and before it was finally decided upon - there would be much more of an imperative to get consultation under way. Employers would be forced to begin consulting before the decision was finalised or risk a substantial protective award. There would be no time to work out a detailed PR strategy or plan which areas were available for "genuine" discussion.
We will have to wait for future cases to decide whether or not the tribunal got it right. In the meantime, the possibility that it did may help to make redundancy consultation a rather more meaningful exercise.
1[1994] IRLR 72.
