Thursday 27th March 2014
On 22 January 2014, the Court of Appeal referred the well-known USDAW v Woolworths case (in which HHJ McMullen held that the words 'in one establishment' should be ignored for the purpose of deciding whether collective consultation obligations are triggered by 20 or more people being made redundant within 90 days), to the Court of Justice of the European Union (CJEU).
Earlier this year, the Employment Appeal Tribunal (EAT) held that UK legislation regarding collective redundancy provisions are incompatible with EU Collective Redundancies Directives.
Domestic legislation provides where an employer fails to comply with relevant collective redundancy provisions an Employment Tribunal has the power to make an award against the employer of up to ninety days gross pay for each employee the employer failed to consult (‘the Protective Award’).
Employers are required to consult with employees if they are intending to make twenty or more employees redundant within “one establishment” within a period of ninety days.
However, there has been confusion surrounding the interpretation of “one establishment” in cases where an employer operates from multiple work places. It was unclear whether there would need to be twenty or more employees being made redundant within the whole of the employer’s business, or whether the employees being made redundant would have to have worked at the same place of business in order for the consultation provision to be triggered.
The case of USDAW v Ethel Austin Ltd (in administration) and another concerned an appeal against the Employment Tribunal’s decision that the former employees of Woolworths were not entitled to a protective award as they had worked at stores where less than twenty employees were employed.
The Employment Appeal Tribunal held the domestic legislation relating to redundancy consultations needed to be interpreted to give effect to EU law. Accordingly, the words “at one establishment” have now effectively been deleted from the relevant domestic legislation. As a consequence employers who intend on making twenty or more employees redundant will be required to follow a consultation procedures, regardless of the fact the employees are being made redundant across multiple work places.
This case judgement has a potentially far-reaching effect for those employers operating across multiple work places as they will now need to be aware of the cumulative number of redundancies they intend to make within a ninety day period. Clearly, the consequences of failing to adhere to the collective redundancy provisions could be severe.
Employers may take limited comfort from the fact the Department for Business Innovation and Skill (BIS) have sought permission to appeal against the EAT’s decision. However, until there is any further judgement on the matter employers would be encouraged to seek legal advice if they intend to make redundancies across multiple worksites.
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