Firming up on large-scale redundancy obligations
What is the duty to carry out collective consultation for large-scale redundancies?
Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) imposes a duty on employers to carry out collective consultation where large-scale redundancies (or similar mass dismissals) are proposed. Large-scale, for these purposes, means 20 or more redundancies at one establishment within a period of 90 days.
The duty is to consult with representatives on the proposals about key topics, and to do so whilst plans are still at a formative stage.
The obligation applies independently of any individual consultation the employer may have to carry out.
A long-standing question on such collective consultations is from which point the employer has to judge or evaluate how many people they are 'proposing to dismiss'. If, for example, one phase of redundancies proves to be insufficient and plans are made for a second round, are both sets of numbers to be counted towards the trigger number (20)?
Past EU case law (prior to Brexit) in UQ v. Marclean Technologies SLU indicated that it was necessary for the employer to look forwards and backwards to determine if the threshold is met. Essentially, this was a rolling threshold test. The EAT has clarified that this is incorrect – the employer should look forwards from the point of its proposal only. If you have already carried out redundancies, you do not need to include them when calculating the numbers where circumstances change and further dismissals are necessary.
Mr. Mildenhall (the Claimant) was employed by Micro Focus Ltd from 2015 until his dismissal by reason of redundancy on 29 July 2022. Micro Focus announced large-scale restructuring in 2021 which led to the decision to dismiss him. The Claimant brought a claim for unfair dismissal and a protective award for failing to collectively consult under TULRCA. The decision was appealed to the Employment Appeal Tribunal (EAT).
The EAT found that the language and structure of TULRCA was clear; they also found that what mattered was the situation at the point an employer proposes dismissals in the future, and not how many dismissals were in fact effected when looking at the situation retrospectively - confirming that TULRCA is forward-looking only. Accordingly, collective consultation duties arise under TULRCA when an employer proposes to dismiss 20 or more employees within 90 days in the future.
How will the Employment Rights Act 2025 affect collective consultancy obligations?
This is a timely reminder of the consultation obligations where an organisation is proposing to make 20 or more individuals redundant. This is particularly important given the introduction of the Employment Rights Act 2025 which will provide for significant changes to the collective consultation obligations and enhanced rights for trade unions. Additionally, from April 2026, the protective award for failing to consult will also increase from 90 days' salary to 180 days' salary - meaning that ensuring your obligations under TULRCA are met is of increasing importance, as the financial impacts for failing to do so could be significant.
What steps can employers take to ensure compliance when planning to make mass redundancies?
You should take opportunities to review your structures and any proposals in respect of restructuring. Any decision in respect of restructuring should be recorded clearly so you can evidence when these plans were in fact proposed.
Looking to prepare and need a helping hand?
Get in touch and let our Employment specialists take it from here.
Please be advised that this is an update which we think may be of general interest to our wider client base. The insights are not intended to be exhaustive or targeted at specific sectors as such, and whilst we naturally take every care in putting our articles together, they should not be considered a substitute for obtaining proper legal advice on key issues which your business may face.