Collective consultation and the meaning of establishment: Hints of a surprising decision from the EAT

Collective consultation and the meaning of establishment: Hints of a surprising decision from the EAT


Author: Liz Parkin

There have been a number of stories circulating in the legal press during the past week that suggest we face a significant change in the law concerning collective redundancy consultation.

Although yet to be formally confirmed by the Employment Appeal Tribunal (EAT) - the Judgment is expected imminently - it is being reported that the EAT has overturned the Employment Tribunal decision in the Woolworths collective redundancy consultation claims (USDAW and others v WW Realisation 1 Ltd (in Liquidation) and another ET/3201156/10).

In those cases concerning the mass redundancies that followed the collapse of the retailer Woolworths, the Employment Tribunal decision meant that employees who worked in stores that employed less than 20 employees would not receive any compensation for a failure to collectively consult. This was because the obligation to collectively consult under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) applies where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. The Employment Tribunal ruled that each store was a separate "establishment", meaning that stores employing less than 20 employees were not caught by the obligation to collectively consult.

We understand, following a press release from the Claimants' solicitors, that the EAT has ruled that the words "at one establishment" in TULRCA should be "disregarded" for the purposes of collective redundancies involving 20 or more employees. The EAT has said that the TULRCA legislation should be interpreted in line with the European Directive, which conflicts with the UK legislation, and therefore that the words "at one establishment" should be removed in their entirety.

This will represent a significant shift from the current position and would mean that where 20 or more redundancies are proposed by an employer, regardless of their location, then the duty to collectively consult would be triggered.

The Judgment is not yet available so at this stage it will be difficult for advisers to give definitive advice about the impact of this case. However the indication is that this would be a substantial change in the law and one which will require a shift in the approach to collective redundancies.

We will carefully consider the Judgment once it is released and will update you more fully at that stage. In the meantime, if your business is not planning any redundancies where there will be 20 or more redundancies proposed within a 90 day period - but by applying the usual "establishment" test would not trigger the consultation obligation - it would be prudent to seek specific advice to ensure that any risks are minimised.