Background:
In Debenhams Retail Ireland Limited (In Liquidation) v Jane Crowe [2025] IEHC 141, Barr J. reversed a decision of the Labour Court which found that Debenhams Retail Ireland (“the Appellant”) owed their former employee, Jane Crowe, (“the Respondent”) €1,140 for a breach of its obligations under section 9 the Protection of Employment Act, 1977 (as amended) (the “Act”).
Article 2.1 of the Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies (“the Directive”) states: “Where an employer is contemplating collective redundancies, he shall begin consultations with the workers’ representatives in good time with a view to reaching an agreement.”
Section 9 and 10 of the Act implemented the provisions of the Directive into Irish law. The High Court decision in the Debenhams case centred around Section 9 of the Act which places consultation obligations on employers proposing to create collective redundancies i.e. that they shall, with a view to reaching an agreement, initiate consultation with employees’ representatives, and, that such consultations “shall be initiated at the earliest opportunity and in any event at least 30 days before the first dismissal takes effect”.
Certain aspects of the Act were amended in 2024 (discussed below). The Debenhams case dealt with version of the Act in force as of April 2020. Nonetheless it examined important aspects of the Act which remain in force and the decision has provided welcome clarity on the question of what constitutes the commencement of consultations.
Facts:
On 8 April 2020, the Board of Directors of the Appellant company was informed by its UK parent company that it would receive no more funding and was therefore insolvent. Over the next few days arrangements were set in train to seek the appointment of provisional liquidators to the Appellant.
On 14 April 2020, Ms O’Connor, a member of the Board of Directors, sent a letter via email to Mr Light, the Respondent’s Trade Union representative. The letter set out information in relation to proposed collective redundancies.
Provisional liquidators were appointed by the High Court on 16 April 2020. On 17 April 2020, the first consultative meeting was held between the provisional liquidators, the Board of Directors of the Appellant, and the Respondent’s Trade Union representatives.
Almost 800 employees lodged claims in the WRC under sections 9 and 10 of the Act (i.e. the sections of the Act that set out an employer’s obligation to inform and consult with employee representatives in respect of collective redundancies. The Respondent’s claim was a test case in the matter.
WRC Decision:
The WRC found that the Appellant was required to commence the consultation process under Section 9 of the Act earlier than it did and failed to provide the Respondent with all relevant information pursuant to section 10 of the Act. The WRC awarded the Respondent the maximum award of four weeks renumeration for each breach.
Labour Court Decision:
The Appellant appealed this decision to the Labour Court, which upheld the decision of the WRC. In its decision dated 10 April 2024, the Labour Court agreed that the Respondent failed to commence the consultation process “in good time” as is required by the Directive. The Labour Court held that the consultation process ought to have commended at the point in time where it became clear that collective redundancies were going to be a feature and “By delaying the consultation until after the liquidators had been appointed the respondent limited the options available in terms of coming to an agreement.” The Labour Court determined that the earliest opportunity to commence the consultations was on 9 April 2020, immediately after the Board of Directors became aware that the company was insolvent and passed a resolution that the company would cease trading. While the delay between 9 April 2020 and 17 April 2020 was only eight days, the Labour Court ruled it was still significant enough to narrow the available options and constituted a breach of section 9 of the Act.
Debenhams appealed the Labour Court’s decision regarding section 9, on a point of law, to the High Court.
High Court Decision:
The High Court extensively examined relevant case law, including a number of decisions of the Court of Justice of the European Union (“the CJEU”). Barr J. noted that from the case law, there is a “difficult and nuanced question as to when exactly the obligation on an employer to engage in consultations is triggered.” The High Court declined to address this question in this particular decision.
The High Court held that the Labour Court was entitled to find that as and from 9 April 2020, the Board of Directors were compelled to consider making collective redundancies. However, the High Court accepted submission made by the Appellant that the Labour Court erred in its interpretation of what is required by consultations under the Directive and the Act. Barr J. found that the letter sent from Ms O’Connor to Mr Light on 14 April 2020 in fact started the consultation process, as it was clearly stated in the letter that information was being supplied in accordance with the Act in relation to collective redundancies. Significantly, the Court held that a consultation process can start “in advance” of the first consultation meeting. Accordingly, the Court held that the Labour Court erred in law in finding that the consultation process commenced at the first meeting on 17 April 2020.
The High Court also took into account the surrounding circumstances of the consultation process. The events took place at the beginning of unprecedented Covid 19 restrictions, and the Board of Director’s meeting took place before the Easter Bank Holiday weekend. The Court noted that the obligation to hold consultations “at the earliest opportunity” must be “considered within the practicalities of life on that ground at that time.”
Regarding the delay of eight days, the High Court went on to find that there was no evidence put before the Labour Court of any options having been lost or unavailable as a result of that delay, and accordingly that finding of the Labour Court could not stand.
Finally, the High Court addressed the compensation awarded to the Respondent by the Labour Court. Barr J. held that the Labour Court has no jurisdiction under the 1977 Act to award compensation as a penalty against an employer. The Court held that there was no evidence that the Respondent suffered any financial loss, or lost out on any benefit, due to the delay in commencing the consultation process. Barr J. held that while compensation is not limited to compensation for financial loss, it must be referrable to some form of loss or injury suffered by a person being compensated and there was no evidence before the Labour Court that the Respondent had suffered additional distress due to any perceived delay on the part of the Appellant in commencing consultations.
The Court also looked to the commercial realities faced by the Appellant at the time: the Board of Directors were informed that the Appellant company was hopelessly insolvent. Had they allowed the company to continue trading, they would be guilty of trading recklessly or fraudulently. Further, had they had tried to make any payments or beneficial deals to the employees prior to the appointment of the provisional liquidators, these payments and deals would have been struck down by the High Court as unfair preferences pursuant to ss. 604 and 608 of the Companies Act 2014, as amended. Therefore, the Board of Directors were left in an impossible situation where there was nothing they could do for the Respondent and the other employees. Barr J. held that there was no loss suffered by the Respondent in the delay by the Appellant in commencing the consultation process between 9th April 2020 and 14th April 2020 and accordingly the Labour Court erred as a matter of law in awarding compensation to the Respondent.
Recent Legislative Amendments
It is important to be aware that amendments were made in July 2024 to the Act so that various other persons (other than employers) are now also responsible for complying with information and consultation obligations in collective redundancy situations. These persons are referred to in the amended legislation as “Responsible Persons” and include liquidators, provisional liquidators, receivers or any other person appointed by the Court where the person has assumed full responsibility for the management of the business.
In addition to the employee claims which were under discussion in the Debenhams case (i.e. alleged breaches of the obligations to inform and consult in collective redundancy situations) the amended legislation now creates an additional claim for employees in collective redundancy situations where the employer or responsible person fails to notify the Minister for Trade and Employment of the proposed collective redundancies “at the earliest opportunity” and in any event at least 30 days prior to the first dismissal taking effect. Where this obligation is breached an employee can now be awarded up to four weeks pay in addition to any awards for failure to inform/consult. Furthermore, such a breach may constitute a criminal offence on the part of the employer/responsible person.
Takeaway for employers:
This Debenhams judgement provides helpful clarity on what amounts to consultation in a collective redundancy situation. It is also a helpful precedent for employers arguing against the imposition of an award for a short delay in commencing consultations where such delay did not result in any loss to the employees.
Nonetheless, obligations on employers in collective redundancy situations remain onerous and extremely time sensitive and legal advice will need to be taken and actioned as a matter of the utmost urgency. Even a seemingly small delay in complying with the information and consultation obligations could prove very costly.
Authors – Jane Holian and Laura Killelea
08 May 2025
Anne O’Connell Solicitors
19-22 Lower Baggot Street
Dublin 2.
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