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The Woolworths Case rumbles on... When is an establishment not an establishment?

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The Woolworths Case rumbles on... When is an establishment not an establishment?

The Woolworths Case rumbles on... When is an establishment not an establishment?

The Advocate General has recently released an Opinion that the Employment Appeal Tribunal's ("EAT") decision in USDAW and anor v Ethel Austin and anor, known as the "Woolworths" case, was wrong.


The case concerned the EU Collective Redundancies Directive ("the Directive") and the meaning of an 'establishment' for the purposes of determining when the duty to collectively consult in a redundancy situation arose.






By way of background, section 188 (1) of the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULRCA"), which implements the Directive, states that the requirement to collectively consult will arise where an employer proposes to dismiss 20 or more employees at one establishment, within a 90 day period and by way of redundancy. However, the EAT's decision in the Woolworths case ruled that the UK legislation was not compatible with EU law. The EAT held that the words 'at one establishment' should be deleted from section 188 (1) of the TULRCA and that as such the UK rules should be read as requiring employers to collectively consult whenever an employer proposes 20 or more redundancy dismissals in 90 days or less across its business, regardless of how many redundancies are proposed at any single establishment.


The EAT decision has had a significant impact on UK employers who operate a number of sites as they have been required to collectively consult where they propose to dismiss as redundant 20 or more employees across the whole of the business within a 90 day period. Unsurprisingly, the case was appealed to the Court of Appeal who referred the issue of compatibility with the Directive to the European Court of Justice ("ECJ").

Summary

In summary, the Advocate General's Opinion concludes that "establishment" must be read in the same way across the Directive, and to remain in line with current ECJ case law it means the "local employment unit" where an employee is assigned to carry out their duties. This Opinion highlights that employers should not be required to aggregate the number of dismissals by redundancy across the whole business when considering whether collective consultation should take place. The Advocate General also considered the point that this conclusion would prevent many workers from being afforded the protection that collective consultation offers. However, the Opinion stated that the aim of the Directive was to provide a minimum level of protection in a collective redundancy situation and was not to provide full protection to all employees.

Although the Opinion will be welcomed by UK employers, it is not binding on the ECJ. Further, it does not change the current legal position in the UK, as set down by the EAT. On a practical note, if the ECJ follows the Advocate General's opinion, the Court of Appeal will be bound to overturn the EAT's decision in the Woolworth's case. As a result, the duty to collectively consult would only arise where a UK employer proposed to dismiss 20 or more employees, by way of redundancy, at one single establishment within a 90 day period.

However, there will be no certainty on this position until the ECJ judgment is released and this is expected later this year. Whilst, for employers, the Advocate General's opinion is positive, they should continue to comply with the current law as it stands following the EAT's decision.

For more information, contact Jon Taylor.