University and College Union v The University of Stirling

The expiry and non-renewal of a limited-term contract is a dismissal. Whether it is a dismissal “as redundant” for collective consultation purposes depends on the employer’s reason for not offering a new contract.

A reason relates to the individual where it concerns something the employee is or has done, such as suitability for continuing work. A reason arising from the employer’s business needs does not relate to the individual. The employee’s agreement to a limited-term contract is not, by itself, a reason relating to that employee.

The completion of a project or course, or the end of a need for maternity or sickness cover, will ordinarily be a business-related reason. Employees dismissed for such reasons may therefore count towards the threshold for collective redundancy consultation under section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992.

The University proposed substantial redundancies because of a projected deficit and consulted recognised trade unions. It did not include employees whose limited-term contracts were due to expire during the consultation period. The University and College Union complained that this omission breached the statutory collective consultation duty.

Four employees were selected as test cases. Their contracts concerned a research project, undergraduate teaching, maternity cover and sickness or research cover. The Employment Tribunal held that three had been dismissed as redundant and was not satisfied that the fourth had been dismissed. The Employment Appeal Tribunal held that all four had been dismissed, but none as redundant. The Inner House agreed in [2014] CSIH 5.

The central issue was whether non-renewal occurred for a reason “not related to the individual concerned” within section 195(1) of the Trade Union and Labour Relations (Consolidation) Act 1992.

1. The appeal was allowed unanimously and the case remitted to the Employment Tribunal. Lady Hale delivered the judgment, with which Lord Wilson, Lord Sumption, Lord Reed and Lord Hughes agreed.

2. By sections 298 of the Trade Union and Labour Relations (Consolidation) Act 1992 and 95(1)(b) of the Employment Rights Act 1996, termination of a limited-term contract by its limiting event, without renewal under the same contract, is a dismissal. The remaining question was whether the dismissals were “as redundant” under section 195(1) of the 1992 Act.

3. The Employment Appeal Tribunal correctly formulated the distinction between individual and business-related reasons. A reason relates to the individual where it concerns something the employee is or has done. A reason arising from the employer’s need to effect business change does not. Its error was to place the ending of a limited-term contract in the former category merely because the employee had agreed to that contractual term.

4. Treating agreement to a limited-term contract as an individual-related reason would effectively exclude all such contracts from the consultation duty. Parliament had expressly excluded only some limited-term contracts at the relevant time. That legislative structure showed that other such contracts could fall within the duty. The amended definition also could not sensibly be read as narrowing the classic redundancy situations covered by the earlier law or excluding dismissals used to reorganise a business.

5. The relevant dismissal is the failure to offer a new contract after the limited-term contract ends. The employer’s reason for that failure must therefore be identified. The contractual term, or the employee’s agreement to it, cannot alone supply the reason, since limited-term contracts are often renewed.

6. A decision not to renew because the employee is unsuitable, although the work remains necessary, relates to the individual and is not a redundancy dismissal for this purpose. By contrast, completion of a research project or teaching course is a business reason because the work is no longer required. The end of maternity or sickness cover will also usually be a business reason: the work remains, but the business no longer needs another person to perform it.

1. United Kingdom Supreme Court: The Union’s appeal was allowed unanimously and the case was remitted to the Employment Tribunal: [2015] UKSC 26.

2. Inner House of the Court of Session: The court agreed with the Employment Appeal Tribunal that all four employees had been dismissed but none had been dismissed as redundant: [2014] CSIH 5; 2014 SLT 352.

3. Employment Appeal Tribunal: The tribunal held that all four test employees had been dismissed, but none had been dismissed as redundant: [2012] ICR 803.

4. Employment Tribunal: The tribunal held that three test employees had been dismissed as redundant but was not satisfied that the fourth had been dismissed.