July 31, 2013

Removement of requirement for collective redundancies to be at one establishment

Woolworths and Ethel Austin retail chains went into liquidation in 2008 and 2012 resulting in several thousand jobs being lost. The unions brought claims alleging that the employers had failed to comply with their duty under section 188 to consult for a 90 day period. The union asserted that all the stores should be treated as one establishment, whereas the employers had considered that each store was a separate establishment. Consequently where there were less than 20 employees in each site there was no collective consultation.

The EAT held that it was clear from European Union case law that the term “establishment” could be given a broad or a narrow construction but what was important was to give effect to the Directive’s core objective of improving the worker’s rights. In this case, with thousands of workers losing their jobs, and as it was clearly Parliament’s intention to implement the directive correctly, the EAT held it was entitled to construe section 188 so as to give effect to the Directive’s obligation and consequently delete the relevant words of “at one establishment”.

Consequently, the duty to consult collectively over redundancies will now arise where 20 or more employees are to be dismissed regardless of where they work.

This case is surely going to have substantial consequences for large organisations with several sites where they are making one or two redundancies at each site but which, taken together, will amount to more than 20.

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.

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