Collective consultation: is Woolworths once more set to change the regime?

Collective consultation: is Woolworths once more set to change the regime?

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Author: Antonia Blackwell

On 5 February 2015 the Advocate General (AG) delivered his opinion in what has become known as the 'Woolworths' case'. Whilst the judgment of the ECJ is still needed, we look at what might be in store for employers as a result of the AG's opinion.

Background to the case

Many will remember that the high street retailer Woolworths went into administration in November 2008 followed by Ethel Austin in March 2010, both resulted in large-scale redundancies across a number of sites.

Under section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) employers in the UK are obliged to inform and collectively consult where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. Failure to do so can result in a protective award of up to 90 days' gross pay for each affected employee.

Following the redundancies by Woolworths and Ethel Austin, multiple claims were brought for protective awards for failure to inform and consult. At first instance protective awards were only made in respect of those employees who worked at stores where 20 or more employees were made redundant, on the basis that each store was a separate establishment and so the duty to inform and consult was not triggered in respect of stores with fewer than 20 employees.

The trade union representing the ex-shop workers, USDAW, appealed and the Employment Appeal Tribunal (EAT) upheld the appeal deciding that the words 'at one establishment' in the domestic legislation were incompatible with the European Directive and should be disregarded.

This represented a major sea change in practice for multi site employers conducting redundancy exercises across more than one site. The Secretary of State appealed to the Court of Appeal, who referred the cases to the ECJ.

Advocate General's opinion

As a precursor to the ECJ's final decision, Advocate General Wahl (AG) recently gave his opinion that 'establishment' means the local employment unit to which the workers made redundant are assigned to carry out their duties and therefore contrary to the EAT's decision, the European Directive does not require that the number of dismissals in all of the employer's sites are aggregated to determine whether the threshold for collective redundancy consultation is met.

However, the AG held that neither does the Directive preclude this treatment. It is open to each member state to provide a greater level of protection, if it chooses to do so, as long as this would be to the benefit of all workers and as such it is for national courts to determine exactly how each local employment unit is constituted depending on the particular facts of the case.

What does this mean for employers?

While the AG's opinion is helpful for employers and suggests a move back to the pre-Woolworths' world, there are still issues left open for the ECJ or the national courts to decide. It also remains to be seen whether the ECJ will follow the Advocate General's opinion, as it is not obliged to do so.

The ECJ is expected to deliver its decision later in the year. In the meantime, prudent employers will continue to take a cautious approach and aggregate the numbers of redundant employees across all their different sites when deciding whether or not the collective redundancy obligations are triggered.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

About the author

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Antonia Blackwell

Legal Director

0370 086 4087

Antonia is an employment lawyer with over 14 years experience providing commercially focused advice to businesses and employment advice for individuals on all aspects of employment law, both contentious and non-contentious, including proactively managing employment tribunal claims and providing pragmatic employment law advice, as well as advising on discrimination & equal pay, redundancy & reorganisation, executive appointment & exits, union related matters and TUPE advice.

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