Outcome Of Case Will Have Significant Implications For Businesses

A high profile case which will have huge implications for how businesses with multiple sites undertake redundancy programmes has been referred to the Court of Justice of the European Union (CJEU).

The long-running case, which could result in employers being required to engage in collective consultation more extensively than previously, focuses on former employees at Woolworths who were made redundant following the collapse of the retailer in 2008 and not consulted with correctly by the Administrator.

Staff who worked at smaller Woolworths stores did not receive protective awards at the initial Employment Tribunal in 2010 when they lost their jobs, whilst former employees who worked in larger shops did. This was because the tribunal decided each individual shop counted as one ‘establishment’ for the purposes of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. This states that:

“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 employer shall consult about the dismissals ...(with) appropriate representatives... of the employees...”

The USDAW union appealed to the Employment Appeal Tribunal (EAT) on the basis that this approach to working out what is an establishment is contrary to the Collective Redundancies Directive.

The appeal was successful and the EAT ruled in 2013 that the words ‘at one establishment’ must be disregarded for the purposes of any collective redundancy involving 20 or more employees. £5 million was awarded to Woolworths staff working in smaller stores who had not been consulted with over their redundancy.

The case was heard yesterday by the Court of Appeal and the matter will now be referred to CJEU.

Expert Opinion

The repercussions of this case are huge. The outcome of the appeal will determine whether employers considering making 20 or more redundancies within 90 days will still need to disregard the location at which those employees work. <br/> <br/>“Unless the decision is overturned, employers will have to continue to grapple with the difficult practical and legal issues caused by this case, in particular, the increased likelihood of having to collectively consult across multiple sites. <br/> <br/>“This latest development is interesting and we await further information in terms of the nature of the referral to the CJEU. It’s certainly a complex case and one that businesses should keep a very close eye on.” <br/>