Whilst the general view is that the recession is over some of its effects can still be felt today.
The demise of Woolworths, Ethel Austin and Comet has had a big impact on how the typical High Street looks as well as, inadvertently, on how HR have to deal with redundancies.
The big change was, of course, collective consultation duties. Just over a year ago they only applied when 20 or more redundancies took place at one establishment in a 90 day period. So a redundancy exercise could have involved hundreds of employees without any obligation to consult with unions or employee representatives as long as there were fewer than 20 employees leaving from the same site.
The Woolworths and Ethel Austin cases changed all that*. Claims for ‘protective’ compensation awards for all the redundant employees, not just those in stores where there were 20 or more, led to the Employment Appeal Tribunal’s bold step of re-writing collective consultation laws and removing the phrase “at one establishment” from the statute. This decision meant that employers were suddenly under a duty to collectively consult whenever they proposed 20 or more redundancy dismissals, regardless of their location, within a 90 day period. A huge administrative challenge for HR in multi-site organisations, but with the risk of compensation awards of up to 90 days pay for each redundant employee, it is a challenge that has to be met at least until the European Court of Justice gets the opportunity to overturn the decision next year.
There has been a similar fight for protective awards for the former employees of the retailer Comet. The news broke in June that the Leeds Employment Tribunal had found that Comet “failed to comply with its obligation to consult trade unions and representatives of employees affected by the proposed redundancies”. Awards of compensation were made for up to 90 days pay. However the answer to the question as to which employees would benefit from these awards has only just been revealed.
The position, generally, is that where there is a recognised union it will make the claim and the award will be made for the benefit of the members that it represents. Similarly in the absence of a union, elected representatives will make a claim and the award will be for the benefit of all the employees represented. However where there are no representatives, claims will have to be made by the individuals and the award can only benefit the individual and no other employees.
In the Comet case the ‘representatives’ had not been properly elected. They had just been appointed by management. As there were no true representatives it looked as though claims could only be made by individual employees and each award would be limited to the individual.
However in another bold move the Employment Tribunal has held that claims made by the false representatives would be treated as claims made by properly elected representatives so that all the employees that they were supposed to be representing could benefit from the awards. The decision means that thousands more former Comet employees will benefit from compensation payments which would have otherwise been limited to just the employees who had actually made a claim.
The impact of this decision may not be as clear as that in the Woolworths case and it is only at Employment Tribunal level so it is not binding on other Tribunals. However whilst it highlights the importance of ensuring that representatives are properly elected in any situation where collective consultation is required its conclusions could raise some odd issues. Take for example a situation where the full consultation requirements cannot be met due to unexpected changes or money problems, will employers still try to follow some form of consultation through ‘representatives’ or will they shy away from this due to the risk that it might make the compensation award even more costly if it is available to all ‘represented’ employees. Clearly the legislation was never intended to discourage consultation but could this be the sting in the tail of the Comet case?
*Usdaw and others v Ethel Austin Ltd (in administration) and others.
**Akbar and others v Comet Group Ltd (In Liquidation)