Local Authority View #27
Feb 24 2021
February 2021 #27 Your round-up of local authority related news and viewsRead More
The Employment Appeal Tribunal has revisited the definition of ‘establishment’ in the context of collective consultation over redundancies – can a school be a separate ‘establishment’ or is the correct establishment an education department? This particular case concerned a local authority, but the principles set out by the EAT around the approach to be taken in defining establishments, are of general relevance. Victoria McMeel reports.
Under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), an employer proposing to dismiss 20 or more employees at one ‘establishment’ within a 90-day period must consult appropriate representatives of the affected employees.
Consultation must begin ‘in good time’ and, where the employer is proposing to dismiss 100 or more employees, at least 90 days before the first dismissal takes effect. Otherwise, the consultation must begin at least 30 days before the first dismissal takes effect.
An ‘establishment’ is not defined in the Act; it may be the entire workforce, or it may be a discrete unit within the workforce. The question of how an ‘establishment’ should be defined is an issue with which the courts have grappled over the years.
In respect of the proposed dismissals of school teachers, the Employment Appeal Tribunal (EAT) in Renfrewshire Council v the Educational Institute of Scotland was asked to consider an appeal from a preliminary decision of an Employment Tribunal on the definition of ‘establishment’ under section 188 of TULRCA.
The Employment Tribunal agreed with the teachers in question, and decided that the relevant ‘establishment’ for the purposes of collective consultation was the Education and Leisure Service of Renfrewshire Council, and not
as had been argued by the Council (which meant it had not consulted under s188 as it was contending it did not apply).
The Council appealed.
The EAT overturned the Employment Tribunal’s decision that the relevant ‘establishment’ was the local authority’s education department.
Whilst the EAT did not make any finding as to what the correct establishment should be (preferring to remit that question back to the Employment Tribunal), the EAT’s judgment made the following useful points:
This, the EAT said, supported its view that the important point in defining ‘establishment’ in section 188 was to identify the unit to which the workers concerned are assigned to perform their tasks.
In conclusion, the EAT firmly upheld the Council’s appeal, saying that “any decision that a school is not a distinct entity flies in the face of reason.”
As the EAT noted in this case, the definition of ‘establishment’ will be very fact sensitive. That said, when looking at the possibility of breaking down a workforce into discrete units (to possibly avoid, or limit, the requirement to collectively consult), this decision provides a useful steer on the general principles that should be applied to the question of the scope of the relevant unit.
Whilst it is possible that an ‘establishment’, for the purposes of collective consultation on redundancy may include an entire workforce, usually, an ‘establishment’ will be less than the whole undertaking of the employer concerned.
The question is likely to relate to practical issues - such as where the employee works – rather than contractual issues, such as the existence of mobility clauses.
Note, however, that the government proposes to reduce the 90-day
minimum consultation period to either 30 days for all collective
redundancies or 45 days for planned redundancies of 100 or more
employees. So, in future, the meaning of ‘establishment’ may
be less relevant when considering how much flexibility may exist
over timescales; but it will still be relevant to whether the
requirement to collectively consult is triggered at all.
Consultation on this matter closed in September and a response is