Employment Appeal Tribunal Overturns Ruling on Collective Consultation Rights
Employees dismissed due to redundancy have won an appeal regarding their collective consultation rights.
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Key Ruling on Collective Consultation Rights
The Employment Appeal Tribunal (EAT) has overturned a previous tribunal’s decision, finding in favour of three employees in a significant case concerning collective consultation rights during redundancy. The case, Ellard & Ors v Alliance Transport Technologies Ltd, centred on whether the employer had a duty to consult collectively before dismissing 20 or more employees within a 90-day period.
Background of the Case
Alliance Transport Technologies Ltd faced financial difficulties, leading to its administration in May 2023. While some employees were dismissed on 2 May 2023, the majority were made redundant on 5 May 2023. An initial Employment Judge had ruled that employees dismissed on 5 May were entitled to a protective award, but those dismissed on 2 May were not. This distinction was based on the judge’s finding that there wasn't a clear proposal to dismiss 20 or more employees as redundant on 2 May.
Grounds for Appeal
The three appellants, Mr Ellard, Mr Hulse, and Mr Warren, argued that the original tribunal had failed to correctly apply Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. Their key arguments included:
- The tribunal incorrectly focused on the specific dates of dismissal rather than considering the broader context of proposing to dismiss 20 or more employees within a 90-day window.
- The tribunal misinterpreted the legal test for when a proposal to dismiss triggers the duty to consult, particularly overlooking the significance of a "clear, albeit provisional, intention".
- The tribunal's conclusion that the intention to sell the business as a going concern was paramount, and that the prospect of a sale was immaterial, was perverse and contrary to the evidence.
The Employment Appeal Tribunal's Decision
Her Honour Judge Tucker allowed the appeal on all three grounds. The EAT clarified that the crucial question was not whether there was a specific proposal to dismiss on a particular day, but whether the employer was "proposing to dismiss" 20 or more employees within a 90-day period. The tribunal stressed that "proposing to dismiss" encompasses ongoing consideration of future events, even if uncertain. Furthermore, the EAT found that the prospect of selling the business as a going concern was a relevant factor in determining whether dismissals were proposed. The judgment highlighted that administrators’ objectives, such as maximising returns for creditors, indicated that closure was envisaged when a sale was no longer a viable option.
Consequently, the EAT substituted its own decision, finding that Mr Ellard, Mr Hulse, and Mr Warren were entitled to a protective award for a period of 90 days, commencing from 2 May 2023. This ruling underscores the importance of timely and meaningful collective consultation when employers contemplate significant redundancies.
Read the entire judgment here: Ellard & Ors v Alliance Transport Technologies Ltd EAT 169
