And The Law Says

Redundancy – meaning of establishment (Woolworths case)

February 11, 2015

Simon Horsfield new

(USDAW v Ethel Austin Ltd and others, aka Woolworths)

There has been a lot of internet chatter about the recent opinion expressed by the Advocate General on the reference to the European Court from the Court of Appeal in the Woolworths case. We asked Simon Horsfield to give an authoritative view on the current position.

Simon Horsfield commented as follows: As many of our readers will be aware, this case concerns how the term “establishment” is to be interpreted in the UK’s collective consultation legislation. The current legislation provides that the collective consultation obligations are triggered when an employer proposes to make 20 or more redundancies at one establishment in a period of 90 days or less. This had previously led to a body of case law on the issue of what constitutes an establishment, with the widely held view being that, in the case of multi-site organisations, each separate site constituted a distinct establishment. Following a challenge by the Unions, USDAW and Unite, this seemingly settled view was completely unsettled, on the basis that the reference to ‘one establishment’ in the UK legislation is incompatible with the European Directive and should therefore be disregarded. The upshot has been that multi-site employers are currently obliged to count up the number of proposed redundancies across all of their sites in order to determine whether the collective consultation obligations are triggered.

Upon appeal, the Court of Appeal referred the issue to the European Court for a decision on whether, when the European Directive refers to 20 or more dismissals, it means at one establishment or across all of an employer’s establishments. As is the way in Europe, the Advocate General has now given an opinion in advance of the full decision of the Court being given. In short, the Advocate General has opined that European law does not require the number of proposed dismissals to be aggregated across all of an employer’s establishments – it is entirely in accordance with European law to treat an establishment as the unit where the workers are assigned to carry out their duties; furthermore, it is a matter for each individual country in the EU to decide whether the 20 or more dismissals have to be at one establishment or across all establishments.

We asked Simon whether employers were free to change their current practices in the light of this decision and he replied as follows:

No, we do not recommend that UK employers change their practices just yet because (i) this is a non-binding opinion – only decisions of the full ECJ are binding; and (ii) whilst the UK’s approach post-Woolworths may be more favourable than the European law requires, there is nothing to prevent the UK deciding to adopt a more favourable approach that the European Directive requires. Indeed, it could still be the case that the UK Courts will decide that this wider protection is more in keeping with the spirit of the European Directive.

For further information about how to approach collective redundancies, please speak contact Simon Horsfield, or your usual gunnercooke adviser.

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