Capital Energy Solutions v Arnold

For collective redundancy consultation, a dismissal on expiry of a fixed-term contract is not automatically for a reason related to the individual. The tribunal must identify the reason for each dismissal, determine whether there was more than one reason, and ask whether all those reasons were unrelated to the individual, as required by section 195 of the Trade Union and Labour Relations (Consolidation) Act 1992. The expiry of the term may be an individual-related reason, particularly where the contract was genuinely personal or there was no established practice of renewal. Conversely, the collective withdrawal of funding may indicate a reason unrelated to individual employees. The relevant facts and reasons must therefore be examined before deciding whether the section 188 consultation duty was triggered.

Capital Energy Solutions appealed against an Employment Judge’s decision awarding the respondent £860 by way of a protective award for failure to consult under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. The employer’s work was funded by government initiatives, and that funding expired. Between 25 and 30 employees, many engaged under fixed-term contracts, were dismissed when their contracts were not renewed or expired.

The Employment Judge treated the withdrawal of funding as the reason for all the dismissals and counted them for the purposes of section 188. The appeal concerned whether the Judge had properly determined whether the dismissals were for reasons unrelated to the individuals within section 195, including whether the expiry of the fixed terms constituted an additional individual-related reason.

1. Appeal allowed. The case was remitted to the same Employment Judge for reconsideration, with such further evidence as she considered appropriate.
2. Section 195 requires the tribunal to identify the reason for dismissal, ask whether there was more than one reason, and determine whether all the reasons were unrelated to the individual. A dismissal does not qualify as redundancy for this purpose if any one of its reasons is related to the individual.
3. The expiry of a fixed-term contract is not automatically an individual-related reason. The answer depends on the practical and contractual circumstances. A substantial group of fixed-term employees dismissed at about the same time for the same funding-related reason may support the conclusion that the reason was collective rather than individual. However, where the contract was individually negotiated or the employment ordinarily ended when the term expired, the expiry may be an individual-related reason.
4. The approach in University of Stirling v University College Union [2014] CSIH 5; [2014] IRLR 287 was materially relevant. The Employment Judge had not clearly considered whether the dismissals had mixed reasons, including a reason arising from the employees’ agreement to fixed-term employment. That was an error of law.

The matter was remitted because the Employment Appeal Tribunal could not determine the proper factual answer itself.

• Employment Appeal Tribunal: allowed the appeal against the Employment Judge’s decision and remitted the case for reconsideration.