When are the collective redundancy consultation requirements triggered? This has been the question we have all been wondering since the law was turned upside down two years ago by the Woolworths case.
Today (30 April) the European Court has given their decision on the matter, holding that collective consultation is triggered only when numbers reach 20 or more redundancies at the physical site or location where an employee carries out their work (the court has used the phrase “assigned”).
To remind you about the background, UK law requires an employer to consult collectively when it proposes to make 20 or more redundancies at one establishment within a 90-day period. Before the Woolworths case, businesses took the approach that they were only required to collectively consult if 20 or more employees were at risk of redundancy within one specific site or branch, making it less common for collective consultation requirements to be triggered.
The Woolworths case changed all that when the Employment Appeal Tribunal (EAT) held that even employees working in Woolworths stores (in administration at the time) employing fewer than 20 employees, had the right to be consulted collectively, because the overall number of redundancies at other stores should have been taken into account. All employees were therefore entitled to be compensated for a failure to consult collectively, not just those employees at stores with 20 or more staff.
The EATs decision was further appealed (to the Court of Appeal, who in turn referred the matter to the European Courts). The Advocate General’s opinion, delivered on 5 February 2015, disagreed with the EATs decision (our blog at that stage can be found here) and since then, after weeks of waiting, we’ve finally today heard from the European Court which has also decided that the EAT was wrong. The Court followed the opinion of the Advocate General and gave the clearest indication yet on the meaning of ‘establishment’, deciding that “where an undertaking comprises several entities, it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the ‘establishment’”.
So where does this leave us?
We’ve all been watching this case closely and businesses have had to go through redundancy processes without certainty on the law and tribunal cases have been stayed pending this decision. This outcome now means there is much greater certainty, but it should be borne in mind that the case will be coming back to the UK Court of Appeal for a final say, although it seems likely that the Court will hold that each Woolworths store was one separate ‘establishment’.
We are highly likely to be back to the position that employers are able to avoid collective consultation procedures when less than 20 employees are being made redundant at any one location. However, there is still scope, for example, for a collection of sites within close proximity of each other, who have the same management control (on a local level), to be considered one establishment. Given this, advice should still be sought in any particular case but it is fair to say that we are all now much clearer on the position.
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