Anticipated Debenhams decision issued by the Labour Court on Collective Redundancies – what does in “good time” mean

Jane Crowe v Debenhams Retail (Ireland) Limited & Debenhams Retail (Ireland) Limited in Liquidation.

The recent decision of the Labour Court provides useful insights into and clarifications regarding the collective redundancy obligations for employers that arise under the Protection of Employment Act, 1977 (“the 1977 Act”), which organisations should be alert to when proposing to implement a collective redundancy. In brief, employers are obliged to inform and consult with employees over a minimum period of 30 days in advance of a collective redundancy. A collective redundancy will be triggered if it is proposed to make 5 employees redundant out of a workforce of 21- 49 or typically 10 per cent of the workforce.
The background to this case is well traversed, when at the commencement of the Covid-19 pandemic in 2020, Debenhams Retail (Ireland) limited announced it was closing its stores in Ireland.  It became quickly apparent that, in addition to the closure of the shops and a pending liquidation, the employer would not be honouring enhanced redundancy packages for long serving staff, which resulted in extended industrial action at the Debenhams premises.
The Law
Section 9 of the 1977 Act requires an employer to consult with representatives in “good time” and at least 30 days before the issuing of notice of termination with employees’ representatives. Section 10 of the 1977 Act provides that employers must also supply representatives with “relevant information” during the consultation process, to avoid and minimise the effect of any redundancies. A breach of either section may result in an award by the WRC of 4 weeks’ pay for each affected employee.
WRC Decision May 2023
Jane Crowe/Mandate issued proceedings against 2 respondents, Debenhams Retail (Ireland) Limited and Debenhams Retail (Ireland) Limited in Liquidation as separate respondents, alleging contravention of sections 9 and 10 of the Act, representing 4 claims on behalf of each member. This was litigated on the basis of one main test case together with the logistical feat of lodging over 750 individual claims on behalf of Mandate members in the WRC. The WRC found that Debenhams as the employer had failed to comply with their consultation obligations under both Sections 9 and 10 of the Act and awarded 8 weeks’ pay. The Adjudication Officer found that the legal personality of the employer did not change when the liquidator was appointed and found that there were only 2 valid complaints against one respondent, Debenhams Retail (Ireland) Limited only.
Labour Court Decision April 2024

On appeal to the Labour Court, Debenhams challenged both findings under Sections 9 and 10. The Labour Court agreed with the Adjudication Officer’s decision that there was in fact only one entity pre and post liquidation, that the legal identity of Debenhams as the employer continued.

The Labour Court also upheld the WRC decision pursuant to Section 9 on the basis that Debenhams failed to commence the consultation process “in good time/ earliest opportunity” as required by the Directive 98/59/EC and the 1977 Act. The consultation process commenced on 17 April 2020 at the height of Covid-19 shutdown. The Labour Court found that in reality there was an opportunity to commence the consultation process earlier on or around 9 April 2020 when collective redundancies were a real possibility. It was noted that correspondence issued on 9 April 2020 from one of the directors, confirming that the Board of Management had ceased to trade in response to confirmation from the UK that they would no longer be in a position to fund the Irish operations. It was submitted and accepted that, as of this point, Debenhams were contemplating redundancies.

There was also evidence that Debenhams had received legal advice on the implementation of collective redundances. Therefore, at that point in time, when it became clear that collective redundancies were going to be a feature, it was suggested that this is when consultation should have begun. The court said there had been an incorrect assumption that the liquidator had to be appointed before the consultation could begin and that it was not in good time or reasonable to delay the consultation until after the liquidators ‘had been appointed’. The Labour Court made an important point that there is no requirement on a company to have all relevant information before commencing a consultation process. The bottom line is that the Labour Court found that, by failing to consult sooner rather than later, this narrowed the options for the staff in the context of a collective redundancy consultation.

Unlike the Adjudication Officer in the WRC, the Labour Court did not uphold the decision that Debenhams had failed to provide the relevant information as required under Section 10 of the Protection of Employment Act 1977 and considered that queries submitted by Mandate acting on behalf of the workers were mainly addressed by the liquidator.

CC Solicitors is one of the leading, specialist employment law firms in Ireland. Please do not hesitate to contact a member of the team should you require any advice on collective redundancies or industrial relations matters.