“Establishment” is the entity to which a worker is assigned

To recap, the union had brought claims in the Employment Tribunal for protective awards on the basis of a failure to collectively consult under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) section 188. This provides that collective consultation is required where it is proposed to dismiss more than 20 employees at one "establishment". The question arose during these proceedings as to the meaning of "establishment". The union sought to demonstrate that TULR(C)A section 188 was not compatible with the EU Collective Redundancies Directive in using the words "at one establishment" because (it said) the meaning in the EU Directive was intended to aggregate all the employees at the various establishments owned by the employer. The question referred to the ECJ was whether the reference to "at least 20" in the Directive referred to the number of dismissals across all the employer’s establishments (where dismissals took place within a 90 day period) or the number of dismissals in each separate establishment.

The Advocate General’s opinion has now been followed by the ECJ, which confirms that the Directive does not require all "establishments" to be aggregated for the purposes of identifying whether the over 20 employee threshold has been reached and that section 188 of TULR(C)A is compatible with the EU Directive. This will come as a great relief to employers, as the protective awards for this case, and potentially many others, could have run into thousands of pounds if collective consultation should have taken place across all the different shops. It is now therefore conclusive that the meaning of "establishment" is the entity where the individual actually works and not all the employer’s establishments taken together.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.