Expiry of fixed term contracts and redundancy consultation

In the recent case of University College Union v University of Stirling, the Inner House of the Court of Session held that the dismissals of 4 employees on expiry of their fixed term contracts were not dismissals for redundancy and therefore collective consultation obligations did not apply to those employees. 

21st January 2014

In the recent case of University College Union v University of Stirling, the Inner House of the Court of Session held that the dismissals of 4 employees on expiry of their fixed term contracts were not dismissals for redundancy for the purposes of section 195 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) and therefore collective consultation obligations under section 188 of TULRCA did not apply to those employees. 

The 4 employees were employed by the University on fixed term contracts of varying lengths, which the employees understood meant their contracts would come to an end at a defined time. Their contracts came to an end during a redundancy exercise. The University and College Trade Union brought a claim on behalf of the employees arguing that the University had failed to comply with its collective consultation obligations under TULRCA and that the employees had been dismissed as redundant.

Section 188 of TULRCA provides that employers are required to collectively consult with employee representatives where they are proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. Dismissal as redundant is defined at section 195 of TULRCA as “dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related”.    

The Tribunal interpreted “related to the individual” as meaning a reason “direct and personal” to the individual. On that interpretation the Tribunal found that the reason for dismissal in these cases was not related to the individual, therefore, for the purposes of TULRCA, the employees had been dismissed as redundant. 

The EAT upheld the University’s appeal. It found that “related to the individual” meant “something to do with him such as something he is, or something he has done”, as distinct from a reason related to the employer. Where the contracts came to an end as agreed in the contract, and not as part of a business decision made by the employer, the collective consultation obligations did not apply. The employees’ had agreed that their contracts would end at a specified time and therefore the reason for dismissal related to the individual and was not dismissal by redundancy.

The Inner House of the Court of Session upheld the EAT’s decision: the reason for the dismissal in each case was the employee’s voluntary agreement that the contract would end at a defined time and therefore a reason related to the individual and not redundancy, thereby removing the requirement for collective consultation. 

This decision went against the general view that in many cases redundancy could result from the expiry of a fixed term contract. However, following the decision of the EAT, TULRCA was amended, with effect from 6 April 2013, to confirm that where employers propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, proposed dismissals of employees on fixed term contracts at the agreed termination point, are not to be included in collective consultations.