14 February 2012

The Scottish Employment Appeal Tribunal (“EAT”) has announced its decision in the case of University of Stirling v University and College Union, an important case which may be of particular interest to our clients and contacts in the education sector.

The latest decision goes against a raft of established authorities on the issue of redundancy consultation and the dismissal of fixed term employees.

You will be aware that where an employer envisages 20 or more redundancy dismissals at one establishment in a 90 day period, it must consult with Union/elected representatives for 30 days (90 days if there are to be 100 or more redundancies) or face claims for protective awards (up to 3 months’ pay for each employee).

An important question is to consider whether, in assessing how many redundancy dismissals there are to be, one must include those employees on a fixed term contract whose contracts are to expire on the intended date, but which are not to be renewed.

The Stirling University case concerned a number of employees whose fixed term contracts were not renewed, for various reasons – funding for a researcher’s role had ceased, one employee had been employed to teach 3 modules which had now been completed, cover for maternity leave no longer needed, and cover for sickness absence no longer needed.

The tribunal in this case, in line with the decisions of a number of other tribunals, concluded that these employees must be included in any assessment of the need for collective consultation, because the definition of redundancy (in this context), and the need for collective consultation, was met – the reasons for dismissal did not relate to the employees themselves but to the employer’s issues (i.e. redundancy or other organisational issues).

The EAT has disagreed in this case, finding that one of the reasons for dismissal did relate to the individual, namely that in each case the individual had signed a fixed term contract agreeing that their employment would end on a particular date.  That being so, the definition of redundancy in this context (that the reasons for dismissal do not relate at all to the individual) was not satisfied, and the individuals need not be included in any collective consultation process.

The EAT does not go so far as to say that the expiry and non-renewal of a fixed term contract willnever be relevant for collective consultation, but that is the logical conclusion.  Once it is accepted that signing a fixed term contract which is to expire on a particular date is a personal reason, then it is hard to see how the definition of redundancy for collective consultation purposes can ever be satisfied when that contract expires.

This is therefore both an important and a controversial decision, and a further appeal is a possibility.

Those employers who make widespread use of fixed term contracts (such as the education sector, using such contracts for lecturers and researchers) will take some comfort from this decision, but given that this may not represent the settled, long-term legal position, may still want to think carefully about collective consultation if the issue arises.   Employers must remember of course, that such employees will still have potential claims for unfair dismissal, and perhaps claims under the Fixed Term Employees Regulations.  Also, where redundancies occur during (rather than at the end of) the fixed term, this will be “redundancy” as defined and collective consultation may be triggered.

Contact: Douglas Strang