UK: Collective redundancy consultation - resignation in response to pay cut counts towards consultation threshold

In applying the threshold for collective redundancy consultation obligations of 20 proposed dismissals, all dismissals which are for a reason unrelated to the individual concerned count. This includes dismissals and re-engagements in order to change terms of employment; the ECJ has now confirmed that it also includes an employee resigning in response to an employer unilaterally making significant and detrimental changes to essential elements of an employee's employment contract, for reasons not related to them as an individual. In Pujante Rivera v Gestora Clubs Dir SL, a resignation in response to a unilateral reduction in salary of 25% counted towards the threshold. Employers will need to ensure a record is kept of such cases and that they are counted when considering whether the consultation threshold has been met.

Further case law on the trigger for collective consultation is expected in due course. The Supreme Court recently ruled that the claim for failure to consult in relation to the closure of a US military base in the UK can proceed. The case will now return to the Court of Appeal to determine whether the obligation arises when an employer is proposing to make a strategic business or operational decision that will foreseeably lead to collective redundancies, or only once the employer has made that strategic decision and is proposing consequential redundancies (United State of America v Nolan). The uncertainty is unhelpful for employers, particularly given that there is also a duty to notify the Secretary of State by serving HR1 forms when the duty to consult applies. Breach of this requirement is a criminal offence, and the last month has seen the first reported prosecutions of directors for this offence in connection with redundancies at City Link and Sports Direct.

Update April 2017: the case of United State of America v Nolan was dismissed with consent by the Court of Appeal.