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The question for the Supreme Court in University and College Union v The University of Stirling was whether a dismissal because a limited term contract had expired and had not been renewed was a dismissal ‘for a reason not related to the individual concerned.’

The Law

The Trade Union and Labour Relations (Consolidation) Act 1992 obliges employers to collectively consult with employees if the employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

The expiry of a fixed-term contract and its non-renewal amounts to a dismissal pursuant to the Employment Rights Act 1996, s 95, and s 298 of the 1992 Act.

Section 195(1) of the 1992 Act defines redundancy as “references to dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related”. This definition is lifted directly from Council Directive 98/59/EC on the approximation of laws of the Member States relating to collective redundancies (the “Collective Redundancy Directive”). Redundancy under the 1992 Act has a much wider meaning than it does in the context of individual unfair dismissals.

The 1992 Act went further than was required by the Collective Redundancy Directive, by imposing an obligation in some instances to collectively consult in respect of the expiry of fixed-term contracts. There is no such obligation in EU Law, as the Collective Redundancy Directive does not apply to employees employed under fixed term contracts.

Background

In 2009 the University did not undertake collective consultation with employees who were employed under limited term contracts which were to come to an end during the consultation period, arguing that such dismissals were related to the individuals concerned.

This analysis was rather surprisingly accepted by both the Employment Appeal Tribunal and the Inner House of the Court of Session (but not the Employment Tribunal).

The Supreme Court’s Decision

The Supreme Court unanimously allowed the appeal. Lady Hale, applying a common sense approach to the issue, held that:

‘The question is whether the reasons for the failure to offer a new contract relate to the individual or to the needs of the business. Sometimes, no doubt, it will relate to the individual. The employer may still need to have the work done, but for one reason or another considers that this employee is not suitable to do it. That would not be a dismissal for redundancy. But the ending of a research project or the ending of a particular undergraduate course would not be a reason related to the individual employee but a reason related to the employer’s business. The business no longer has a need for someone to do the research or someone to teach the course.’ (emphasis added)

Comment

In light of the Supreme Court’s decision, a number of former employees who were wrongly excluded from collective consultation exercises in 2009 will recover compensation.

However, in line with the government’s commitment to avoid the so-called ‘gold-plating’ of domestic legal obligations that are derived from EU Law, the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013 amended s 282 of the 1992 Act with effect from 6 April 2013. Accordingly the collective consultation obligations no longer apply to dismissals effected by the expiry of a fixed term contract.