Consultation requirements for dismissal of fixed-term workers clarified and TUPE update

Posted by Mike Wilson on
An employer who is proposing to dismiss 20 or more employees over a 90 day period is under an obligation to carry out collective consultation with their staff or trade unions.

This applies to collective redundancies and other dismissals (e.g. where the employer is seeking to collectively change terms and conditions). In the higher education sector it was thought this obligation potentially applied where a number of fixed term contracts (FTCs) came to an end at the same time.

Under legislation in force since 6 April 2013, FTCs which have reached their agreed termination point are now expressly excluded from the obligation to collectively consult (subject to exceptions), and the minimum starting point for consultation of 100 employees or more has been reduced from 90 to 45 days before the dismissals take effect.

The certainty this will create surrounding the expiry of FTCs is vital for the higher education sector which makes extensive use of FTCs. Many universities use FTCs to enable efficient project work and this legislation is a welcome clarification. It means that universities will no longer need to carry out continuous consultation just because a consignment of FTCs are all terminating at the same time.

The law on this area has been uncertain since the 2012 case of Stirling University v University and College Union. Prior to this case higher education providers had assumed that if 20 or more FTCs were terminating at the same time then there would be an obligation to consult collectively under the legislation. Stirling University however dismissed a group of employees who were all on FTCs but did not consult beforehand. The Union subsequently brought a claim alleging that the University should have followed the collective consultation procedure. The Employment Appeal Tribunal held that the legislation did not apply to the fixed-term employees because the reason for dismissal related to them as individuals (namely they agreed to the fixed term). There was therefore no obligation to collectively consult. It was always thought that this decision was open to challenge and so this change in the law will bring welcome relief to the sector.

To benefit from the exemption the FTC must have a clear termination date and must be at the end of its natural life. The termination point may be reached at a specified time or on completion of a particular task. The Fixed-Term Workers Directive allows for an exemption from the obligation to consult and so the Government's view is that it has merely brought UK law in line with other EU member states who already offer this exemption. However, employers should be aware that the exemption will not apply if they are considering early termination of the FTC as a result of redundancy. FTCs that have a term of 3 months or less, or which are made in contemplation of performance of a specific task which is not expected to last for more than 3 months, are already excluded under statute where the employee has not been continuously employed for a period of more than 3 months.

Higher education providers should also remember that fixed-term employees will still benefit from protection under the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002. Unions who are unhappy with this change in the law may seek to challenge decisions instead on the principle of non-discrimination between permanent and fixed-term employees.

Woolworths case leaves uncertainty

It should also be borne in mind for any higher education providers who are planning on making collective redundancies, or collective changes to terms and conditions, that the law appears to be in a state of flux following a decision in the case of former Woolworths employees who worked in smaller stores. These employees were initially found not to be entitled to a 'protective award' for failure to inform and consult about collective redundancies because each store was held to be one 'establishment' and therefore in stores of less than 20 employees, collective consultation was not necessary. This has been reversed on appeal and the Employment Appeal Tribunal ruled that the well-known concept of 'at one establishment' in the relevant legislation in this context is contrary to EU law and should be 'disregarded'. This could have a profound effect on many redundancies because collective consultation would be triggered where 20 or more redundancies are made across an employer's business, regardless of the fact that they may be located at different sites. However BIS has now been given permission to appeal the decision to the Court of Appeal. Please contact us if this may affect your institution.

Impact of proposed changes to TUPE on HEI sector

Another significant change to employment law on the horizon for the higher education sector is the Government's proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 ('TUPE'). If a business is "TUPE transferred" then any dismissal where its principal reason is, or is connected with, the transfer is automatically unfair unless it is for an economic, technical or organisational reason entailing changes in the workforce. The Government is going to change the definition of 'entailing changes in the workforce' to include a change in location, and also to remove the wide ambit of the words 'connected with' the transfer. This could, for example, make it easier for a university that has a split campus to move an employee from one campus as a result of a TUPE transfer. Given the tough economic climate, universities may also be looking at sharing back-office resources or outsourcing some tasks and this proposal, if implemented, may allow them to move staff to another office if necessary following the transfer. However, advice would still need to be taken, because whilst any dismissal (or resignation/constructive dismissal) arising from a transfer-related change in location may not be automatically unfair, it could still be found unfair under normal principles.

The Government will also limit the applicability of terms and conditions of collective agreements to one year after a TUPE transfer, after which they could be varied provided any change which is by reason of the transfer is no less favourable overall (and subject to the general law regarding changes to terms and conditions). As the higher education sector has a great deal of trade union activity and therefore a great deal of collective agreements, this will be attractive to universities as they seek to make their businesses more efficient and cost effective.

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Mike specialises in all aspects of employment law, including restrictive covenants, commercial agents regulations and disqualification of directors.

Mike Wilson
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