Wednesday 29 April 2015

Redundancy and Limited Term Contracts

The Supreme Court has, this morning, reversed the Court of Session's decision in University & College Union v University of Stirling.

Collective consultation obligations arise if an employer is proposing to dismiss 20+ people as redundant within a period of 30 days.  Redundancy is defined, for this purpose, as dismissal “for a reason not related to the individual concerned".  Is the expiry of a limited term contract (previously known as a 'fixed term contract') a reason related to the individual concerned?  If yes, then any employees leaving because of expiry of their contract will not count towards the 20+ headcount.  If no, then they will count.

The Supreme Court held that dismissal because of expiry of a limited term contract was a reason not related to the individual.  Even though the individual had agreed to the expiry date, the statutory test was there to exclude situations where the real reason for dismissal related to the individual rather than the needs of the business.  Here, the decision not to renew limited term contracts was because of business requirements, and thus the individuals needed to be included for headcount and consultation purposes.

Note this decision is no longer of practical relevance.  The events in this case date back to 2009.  However, under the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013, the law changed in April 2013 so that employees whose fixed-term contracts expire will not be included within the headcount in collective redundancy consultation situations.

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