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31 July 2013 0 Comments
Posted in Employment, Opinion

Removement of requirement for collective redundancies to be at one establishment

Author headshot image Posted by , Partner

In a case which is bound to have important ramifications for businesses with multiple sites, Usdaw v Ethel Austin Limited (in administration) and another (the Woolworths case) has held that in order for compliance with the EU collective redundancies Directive to be achieved, section 188 of the Trade Union and Labour Relations (Consolidation) Act, the requirement to collect the consultant where there are more than 20 employees at risk of redundancy in one establishment, must be removed. Whereas up until now the duty to consult collectively with employees where redundancies over 20 were expected at one establishment generally meant that each site could be treated as a separate establishment provided it had certain degree of autonomy, the result of this case means that the collective consultation requirements will be triggered where at least 20 employees are intended to be made redundant over a 3 month period regardless of where they work.

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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