Union challenges UK redundancy consultation law

A complaint submitted to the European Commission in March 2000 by the UK trade union MSF raises new questions over the adequacy of UK's implementation of the EU collective redundancies Directive.

On 15 March 2000, the UK's Manufacturing Science Finance (MSF) trade union, which represents skilled and professional workers, submitted a formal complaint to the European Commission alleging that UK legislation requiring employers to consult employee representatives on impending redundancies fails to implement satisfactorily the requirements of the EU collective redundancies Directive (98/59/EC). The union's move comes only months after the government introduced revised consultation requirements - via the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999- with a view to ensuring compliance with EU law (UK9910134F).

The union believes that the UK legislation "lacks sufficient clarity and therefore fails to implement the intent of the original Directive". MSF's central concern is that the information and consultation process required by the Directive when employers are "contemplating" redundancies is "regularly ignored in the UK, since decisions about mass redundancies are often announced to the news media and the Stock Exchange before any information has been provided or consultation begun with workers' representatives. This is particularly the case where mergers and takeovers are involved."

MSF has pursued a number of employment tribunal cases against companies in the financial services sector which have not consulted over planned redundancies prior to the public announcement of mergers on the grounds that to do so would have breached Stock Exchange rules. MSF points out to the Commission that, in a case between MSF and United Assurance, decided in September 1999, "the tribunal found that this employer had breached no UK law despite the fact that it announced its decision to cut 1,700 jobs and close its London head office to the news media and Stock Exchange before any consultations of any kind took place with our union. We think this case perfectly illustrates the failure of UK law to implement the intention of the collective redundancies Directive."

Current UK legislation on redundancy consultation states that the duty to consult employee representatives arises "where an employer is proposing to dismiss as redundant" 20 or more employees. The consultation must "begin in good time" and must in any event begin at least 30 or 90 days before the first dismissals take effect, depending on the number of employees involved. In the United Assurance case, the tribunal ruled that the company had in fact consulted in good time: in the tribunal's view, the announcement of the merger and of the scale of consequent job losses did not mean the company had formulated specific proposals for redundancies and it was only when it had that the duty to consult arose. MSF is appealing against the tribunal's decision.

Guidance published by the Department of Trade and Industry on the current UK redundancy consultation provisions states that "Stock Exchange rules do not preclude employee representatives being informed and consulted in advance where collective redundancies are planned in connection with a takeover" and that this has been confirmed by the director-general of the Takeover Panel. The guidance continues: "Provision can be made for employee representatives to be subject to confidentiality constraints for a specified period, but at the same time be sufficiently informed to hold meaningful consultations with the employer."

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