The Hindu Business Line : `Job losses are not far away in Corus'

Legal angle
If Corus were to dismiss an employee unfairly, it would face having to pay compensation of up to £60,600 (approximately Rs 52 lakh) to that employee.

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Chennai Feb. 10 It has been about a week since Tata Steel made a successful bid for the Anglo-Dutch steelmaker, Corus. In the aftermath, what looms large in the skyline, along with smoke from the mills, is the prospect of job losses.

One of the largest unions in the UK, the GMB, has expressed its worry that the Tata takeover may have a detrimental impact on the 23,000 Corus employees in the UK. The General Secretary of the main steelworkers' union in the UK, Community, has made similar comments.

In this context, Business Line interacted with Mr Laurence Rees, Partner, Employment, Reed Smith Richards Butler LLP, London, for views on the UK employment law that should matter to Tata.

Excerpts from the interview:

If changes are required in the UK workforce, what UK employment law issues will Tata need to consider?

One of the main concerns expressed so far is the geographical spread of Corus's UK plants. If the decision were made to close one or more of the plants, or to reduce the workforce significantly, resulting in large-scale job losses, UK law would require Corus to consult with representatives of the affected workforce. These obligations are triggered where an employer proposes to dismiss 20 or more employees as redundant at any `establishment'.

Do the unions play a role? How?

Where an employer recognises a trade union in respect of affected employees of a particular category, consultation about dismissals must take place with the union. Where there are potentially redundant employees of a category in respect of which no union is recognised, Corus would have to consult with employee representatives elected by the employees from amongst their number according to prescribed procedures.

Such as?

Corus would have to start consultations with the union or other representatives at least 30 days before issuing the first dismissal notices to the employees. This period would be extended to 90 days if Corus were proposing to dismiss 100 or more employees at any given site within 90 days or less.

What information would Corus have to give to those who may lose jobs?

Corus would be obliged to provide certain information to the representatives, for example as to the reasons for the proposed redundancies. The consultation process has to cover the possibility of avoiding dismissals, reducing the numbers of employees to be dismissed and mitigating consequences. It has to be undertaken with a view to reaching agreement, but the unions and other representatives do not ultimately have a veto on the employer's proposals.

A failure to consult properly could result in Corus being ordered to pay 90 days' pay to each affected employee. Also, there is also an obligation to give, within the same timescale, notice to the Secretary of State of the Department for Trade and Industry. Failure to do so is a criminal offence.

Is there any European regulation that would be relevant to the situation?

Corus has a European Works Council, made up of employer and employee representatives. This type of Works Council provides for employees to be given information and to be consulted by the employer over a large number of issues affecting the organisation. Any large-scale redundancy situation would almost certainly give rise to an obligation to consult with Corus's European Works Council in addition to the obligation to consult collectively outlined above.

What does all this mean to the affected individuals?

On an individual level, every employee in the UK who has been employed by Corus for a year or more has a right not to be unfairly dismissed. If Corus were to dismiss an employee unfairly, it would face having to pay compensation of up to £60,600 (approximately Rs 52 lakh) to that employee. One of the aspects of a fair dismissal in the procedure for handling of redundancy would mean that Corus would have to consulting employees individually about their own positions and consider redundant employees for any alternative employment which might be available, for example, at any continuing UK sites.

How much would be redundancy pay?

Even if Corus meets all procedural requirements, it would be obliged to give notice to each employee or make a payment in lieu of notice, and to pay each redundant employee who has been employed for at least two years, a statutory redundancy payment, the size of which depends on how much the employee earns per week (subject to a maximum figure), the length of the employee's continuous period of employment with Corus and the employee's age.

The maximum statutory redundancy payment is approximately £9,000 (approximately Rs 7,80,000) per employee.

Is it likely that payments can be higher?

Some employers agree in negotiations with unions they recognise or with employees directly, higher redundancy payments than the law requires.

Other employers make enhanced payments on an ex gratia basis which again can be substantially more generous than that. Whether or not Corus is committed to pay enhanced redundancy payments or agrees to do so, if it turns out that there are to be major job losses in the UK, the overall cost of them is likely to be substantial.

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