In a welcome decision for employers, the Employment Appeal Tribunal (EAT) has held in The University of Stirling v University College Union that the expiry of a fixed term contract is not a “redundancy dismissal” for the purposes of the obligation to collectively consult.
Employers who are proposing to dismiss “as redundant” 20 or more employees at the one establishment in a period of 90 days or less are obliged to collectively consult representatives of the affected employees. The definition of “redundant” for the purposes of this obligation to collectively consult is wider than the definition of redundancy for the purposes of unfair dismissal law and statutory redundancy payments. This wider definition catches any dismissal which is not for a reason “related to the individual concerned.”
As a result of this wider definition, the collective consultation obligation is triggered, for example, when 20 or more employees have their contracts terminated before being offered re-engagement to implement new terms and conditions. It was previously thought that the collective consultation obligation would also be triggered when 20 or more fixed term contracts were due to expire in a period of 90 days or less (or the number of fixed term contracts due to expire when added to other dismissals which were not related to the individual concerned were 20 or more).
However, the EAT in The University of Stirling v University College Union held this was not the case. Lady Smith reasoned that since at least one of the reasons for the expiry of the fixed term contracts in this case was the fact the individuals had accepted they would only be employed for a limited period, the resulting dismissals of the employees at their contracts’ natural end dates were for a reason related to the individual employees and, as a result, the collective consultation obligation was not triggered.
Impact for employers
- This is a welcome decision for employers. If it is accepted (as Lady Smith did) that the obligations to collectively consult arise because of the need to have ordered procedures in place to deal with crisis situations, it would seem right that these procedures need not be followed in circumstances where the fixed term contracts expire at their natural end dates and the employees have had the duration of their fixed terms to plan for this eventuality. Employers who engage large numbers of staff on fixed term contracts as is common in the education sector, will now be reviewing their policies and procedures on collective consultation in light of this case.
- It should be remembered that this case only considers whether employers are obliged to collectively consult on the expiry of fixed term contracts. The expiry of fixed term contracts will still constitute dismissals in law, (and may, depending on the circumstances, be redundancy dismissals) for the purposes of unfair dismissal and statutory redundancy purposes. Also the dismissal of an employee on a fixed term contract before the expiry of that contract may still be a redundancy dismissal, which does count towards the threshold of redundancies which could trigger collective consultation.