296: Collective Redundancy Consultation: ECJ decision on calculating the reference period

In today’s blog we look at the recent Spanish case of UQ v Marclean Technologies SLU, the European Court of Justice (ECJ) considered how to calculate the reference period for determining whether the threshold has been reached to trigger collective consultation obligations under the EU Collective Redundancies Directive.

The Directive is implemented in the UK by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Under the Directive, the obligation to consult arises when a certain number of redundancies occur within a reference period of either 30 or 90 days, depending on the member state. The question referred to the ECJ by the Spanish courts was how this reference period should be calculated: was it the period immediately before the relevant dismissal, or afterwards? In a rather controversial judgment, the ECJ held that under the EU Directive, employers must look both backwards as well as forwards from an individual dismissal to determine whether the collective redundancy threshold is met.

The effect of the ECJ’s ruling is that UK employers must look both backwards and forwards from an individual redundancy to determine whether there are 20 or more proposed dismissals in a 90-day period. This is likely to create practical difficulties for employers who are making redundancies in successive phases. It means that if a redundancy process is already underway when further redundancies are proposed, even if dismissals have already occurred, there is now a risk that each round of dismissals must be counted in the threshold. TULRCA requires employers to engage in collective consultation where they are ‘proposing’ to make 20 or more redundancies at one establishment within 90 days. This has been understood to refer only to future dismissals. The ECJ’s decision means that in theory employers now have to act ‘retrospectively’, which is clearly a problem in practice.

Since the ECJ’s judgment predates Brexit, it amounts to ‘retained’ EU law and is therefore binding on Employment Tribunals and the EAT, although it could be overturned by the Court of Appeal or Supreme Court if they feel it is right to do so. In practice, however, Tribunals may well follow the UK legislation and accept that there is a technical breach of EU law.