Employers must now consult about reasons for closure

The Employment Appeals Tribunal (EAT) has recently considered in UK Coal Mining Ltd v National Union of Mineworkers an employer's duty to consult employees on the business reason for making redundancies as well as having to consult on ways in which redundancies could be avoided.

Employers were previously legally obliged to consult with trade union or employed representatives where they 'propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less'. Thus, consultations must be completed before notices of dismissal are given to any employees.

UK Coal Limited owned Ellington Colliery in Northumberland where 329 were employed. On 26 th January 2005, following a serious flood, UK Coal decided to close the mine and stated that the closure was for safety and economic reasons. This decision resulted in a proposal to make 158 employees redundant. UK Coal then commenced consultation with the NUM and BACM but on 26 th February went ahead with the first compulsory redundancies. The NUM and BACM then brought a claim against UK Coal for failure to consult.

At the appeal stage, the EAT decided that there was an obligation upon UK Coal to consult not only about how redundancies could be avoided but also over the decision to close the pit, giving specific reasons for the closure. Most importantly, the EAT stated that 'the obligation to consult over avoiding the proposed redundancies inevitably involves engaging with the reasons for the dismissals and that in turn requires consultation over reasons for the closure'. The EAT also held that employers must now give staff at least 90 day's notice of any intention to close down a place of work that employs 100 or more workers before the start of any redundancy period.

Thus, the advice for employers considering or proposing the closure of a workplace is the following:

• they must consult over the business reasons for the proposal of redundancies as part of the obligation under s188 TULRCA to consult over ways in which redundancies can be avoided.
• Proposed dismissals should be the subject of consultations but it will only be on rare occasions, such as when there will be a closure and the employer believes that redundancies can be avoided, that there will be no need to consult over the closure decision itself.
• In terms of timing, it has always been good practice to consult before firm decisions are taken on a closure. It will now be necessary to consult before any final 'proposal' is in place in order for consultation about the reasons for the closure to be meaningful.