When Does the Obligation to Consult in a Collective Redundancy Situation Arise?

The Court of Appeal in United States v Nolan ([2010] EWCA Civ 1223) decided that it was necessary to seek clarification from the European Court of Justice (ECJ) on when the obligation to consult arises in a collective redundancy situation.  This was because domestic and European case law in this important area was confused and potentially contradictory.

In March 2006 a decision was made to close a US base.  However, consultation did not commence until 5 June 2006.  The base was closed in September 2006 resulting in 200 redundancies.  Mrs Nolan was among those made redundant. She made a claim for a protective award on the basis that her employer had not consulted representatives in accordance with Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 and in particular, that it had not consulted about taking the operational decision to close the base.  The Employment Tribunal upheld her claim finding that the decision to close the base inevitably meant mass redundancies would occur, so no meaningful consultation could be carried out afterwards.  

In UK Coal Mining v National Union of Mineworkers (EAT/0141/07/RN), the Employment Appeal Tribunal had found that where closing a workplace would inevitably lead to redundancies, consultation should take place about that closure.  However, it was arguable that following the ECJ decision in Akavan and others v Fujitsu Siemens (C-44/08), the UK Coal case had interpreted the consultation obligation too widely.

Following a series of appeals, the case came before the Court of Appeal.  The Court struggled with the meaning of the ECJ's decision in Akavan and in particular, whether the consultation obligation arose:

1.      when the employer was proposing, but had not yet made a strategic business or operational decision that would foreseeably or inevitably lead to, collective redundancies; or

 2.      only when that decision had actually been made and the employer was then proposing consequential redundancies.

The issue has therefore been referred the ECJ for guidance. The outcome of the referral will be of interest to employers as it will clarify exactly when the obligation to consult on collective redundancies is triggered.