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LONDON – 21 February 2005 – LAWFUEL – The Law News Network – The Eur…

LONDON – 21 February 2005 – LAWFUEL – The Law News Network – The European Court of Justice (ECJ) ruling in Junk v Wolfgang Kühnel could double the cost for UK businesses making redundancies of 20 or more employees. The ruling has largely slipped under the radar and employers today may be unaware of its impact.

The effect of Junk is that businesses must now wait the full redundancy consultation period (depending on numbers, 30/90 days) before serving notice of dismissal to employees. Prior to Junk, employers could often give notice during this period, allowing notice and consultation to run concurrently.

As a result of the ruling, UK employers will have to pay employees for the 30/90 day consultation period on top of their notice period, rather than the notice period running concurrently with the consultation period. This could potentially amount to another 90 days pay per employee.

“This is a disaster from the employers’ perspective,” says Stefan Martin, employment partner with the international legal practice, Allen & Overy. “The effect is that redundancy costs have potentially doubled overnight.”

“Each employee will automatically get the full 30/90 day consultation and pay for the full notice period plus any promised redundancy package. It’s a massive additional expense for employers which comes at the worst possible time when they are trying to cut costs in a financial crisis.”

Allen & Overy employment partners warn employers to consider these extra costs if they are currently planning redundancies. “The case is clear and there is little room for interpretation,” explains Martin. “Our advice to employers is to err on the side of caution. If challenged, employment tribunals will have to interpret UK requirements in accordance with the Junk ruling unless the law is changed.”

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.