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University and College Union v The University of Stirling (Scotland)
Factual and Procedural Background
The University projected a significant financial deficit for the academic year 2009–2010 and therefore contemplated making up to 140 permanent staff members redundant. It duly notified the Secretary of State and opened collective consultation with recognised trade unions, including the Union (the Appellant). A voluntary severance scheme reduced the need for compulsory redundancies and the consultation was closed in October 2009.
During the consultation period, several employees were working under limited-term contracts (“LTCs”) scheduled to expire. The University (the Respondent) did not involve these employees in the collective consultation, asserting that the expiry of an LTC fell outside the statutory duty. The Union claimed a breach of the consultation obligation and four test cases were selected for determination before an Employment Tribunal.
The Employment Tribunal found that three of the four employees were dismissed “as redundant.” The Employment Appeal Tribunal held that, although all four employees had been dismissed, none had been dismissed “as redundant.” The Inner House of the Court of Session agreed with that analysis. The Union appealed to the Supreme Court, which issued the present judgment.
Legal Issues Presented
- Does the expiry and non-renewal of a limited-term contract constitute a “dismissal” for the purposes of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“the 1992 Act”)?
- If so, is such a dismissal “for a reason not related to the individual concerned” and therefore a dismissal “as redundant” within section 195(1) of the 1992 Act, triggering the employer’s collective consultation duty?
Arguments of the Parties
Appellant’s Arguments (The Union)
- Employees whose LTCs expire are dismissed for reasons connected to the employer’s business needs (e.g., loss of funding, completion of a project) rather than reasons personal to the individual; therefore they fall within the statutory definition of redundancy.
- Parliament’s 1993 amendment was intended to widen, not restrict, the scope of protection, so excluding virtually all LTCs would defeat the statutory purpose.
- The University’s reliance on employees’ agreement to enter LTCs was an argument raised only at appeal stage and misconstrues the statutory test.
Respondent’s Arguments (The University)
- At least one reason for each dismissal was that the employee had accepted an LTC terminable on a specified event or date; such a reason “relates to the individual,” placing the dismissal outside the redundancy definition.
- The legislative scheme permits differential treatment of LTC employees, and the duty to consult should not extend to them unless Parliament expressly provides.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Association of University Teachers v University of Newcastle-upon-Tyne [1987] ICR 317 | Lack of funding for a post under an LTC can amount to redundancy, thereby triggering consultation duties. | Illustrated that, under the original statutory definition, non-renewal of LTCs could engage redundancy provisions. |
| Commission of the European Communities v United Kingdom (Case C-382/92) [1994] ECR I-2479 | EU law required the UK to expand its definition of collective redundancies beyond reductions in business volume to include reorganisations. | Explained why Parliament amended section 195(1) in 1993 to its current “reason not related to the individual” wording. |
| Andrés Rabal Cañas v Nexea Gestión Documental SA (Case C-392/13) (Opinion of Advocate General Wahl) | Noted that UK law historically afforded greater protection to LTC workers than required by EU directives. | Provided contextual support for recognising that UK legislation intentionally covered some LTC dismissals prior to 2013 amendments. |
Court's Reasoning and Analysis
The Court accepted that an LTC’s expiry constitutes a “dismissal” by virtue of section 95(1)(b) of the Employment Rights Act 1996. The pivotal question was whether the dismissal occurred “for a reason not related to the individual concerned.”
Drawing on the statutory purpose—consultation about avoiding, reducing or mitigating dismissals—the Court held that the phrase distinguishes between:
- Reasons inherent to the employee personally (e.g., conduct or capability), and
- Reasons stemming from the employer’s business requirements (e.g., funding cessation, project completion, organisational change).
An employee’s acceptance of an LTC is not, by itself, a personal reason for dismissal; many LTCs are in fact renewed. Instead, the non-renewal decision must be assessed by its underlying motive. Where work has ceased or diminished because a project ends, funding lapses, or maternity cover concludes, the reason is rooted in the employer’s business, not in any personal attribute of the employee. Therefore such dismissals fall within the statutory redundancy definition.
The lower tribunals erred by treating the very existence of the LTC as a personal reason. Doing so would, in effect, remove all LTCs from the consultation regime—an outcome Parliament neither articulated nor intended.
Holding and Implications
APPEAL ALLOWED. The matter is remitted to the Employment Tribunal to address outstanding issues consistent with the Court’s interpretation of section 195(1).
Practically, employers must now include employees whose LTCs expire—where the non-renewal is driven by business needs—when calculating numbers for collective consultation, at least for periods prior to the statutory exclusion introduced on 6 April 2013. The decision reinforces the distinction between business-related and individual-related reasons for dismissal but does not establish new doctrine beyond clarifying the existing statutory language.
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