What is an establishment for the purposes of the collective redundancy provisions

20 Feb 2013

Renfrewshire Council v Educational Institute of Scotland

The requirement to consult with employee representatives is triggered when an employer proposes to make redundant 20 or more employees at one establishment within a 90 day period.

In this case the Council decided to make fewer than 20 positions redundant at one school and did not consult with representatives.  The teachers concerned said that the Collective Consultation Regulations should have been triggered because across all its employment establishments more than 20 had been made redundant.

The Employment Tribunal decided that the "establishment" for the purposes of collective consultation was the "Council's Education and Leisure Service" which included a much wider number of employees than those employed at the school in question and therefore triggered the collective consultation provisions.

It should be noted that the teachers' job offers stated that they were appointed to the Leisure Service and their Contracts contained mobility clauses.

The President of the Employment Appeal Tribunal (EAT) rejected this approach and overturned the Employment Tribunal's decision.

In summary he held:

1. Establishment is likely to be less than the employer's whole undertaking.  The point being that if all the employer's employees were intended to be included by Parliament the reference to one establishment would have been left out of the statute.

2. Establishment must mean a physical location.

3. The fact that an employer will have central control over some aspects of employment does not mean that employees working at a particular location or unit are employed at the same location or unit as other employees employed elsewhere who are also controlled by the employer centrally.

The school was a distinct entity and was a separate establishment for collective consultation purposes.  The only remaining question is whether all the teachers were assigned to that school and in this regard the EAT's view was that the practical reality of the situation should be taken into account and this meant that things like mobility clauses or the wording of a Contract were not relevant.

Note: When an employer is preparing to make 100 or more redundancies at one establishment within a 90 day period the consultation period is a minimum of 90 days.  From April 2013 this consultation period will reduce to a minimum of 45 days.