Over six years ago, Woolworths and Ethel Austin went into administration, resulting in large scale redundancies. Employees claimed that they should have been collectively consulted, in relation to their redundancies, when stores were closed. Employment tribunal awards for failure to inform and consult under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) were made but only in respect of employees who worked at stores with 20 or more staff. The tribunal decided that collective redundancy consultation was not necessary in respect of stores with fewer than 20 staff and those employees were therefore not entitled to a protective award. The tribunal held that each store was a separate “establishment” for TULRCA purposes. USDAW, the trade union representing the dismissed employees, appealed the decision.
The Employment Appeal Tribunal (EAT) upheld their appeal and found that all employees made redundant were entitled to be collectively consulted once the overall number of redundancies had reached 20 or more, regardless of where the employees worked. The EAT decided that the words “at one establishment” were to be deleted from section 188 of TULRCA in order to give effect to the EU Directive.
On appeal by the Secretary of State (a party to the proceedings, as the Government would be responsible for the cost of the protective rewards due to Woolworths’ insolvency), the Court of Appeal referred questions to the ECJ as to the meaning of “establishment” and whether the phrase “at least 20” refers to dismissals across all of the employer’s entities, or the number of dismissals at each individual entity.
The ECJ held that “establishment” means a local employment unit, to which the workers made redundant are assigned to carry out their duties and dismissals across all of the employer’s establishments do not need to be aggregated to be in line with EU law. Each Woolworths store could be viewed as a separate establishment and employees at stores with less than 20 staff did not need to be collectively consulted.
The decision will provide relief for multi-site employers and will make collective consultation much easier to manage than would have been the case under the EAT’s interpretation of the law. The ECJ has formally referred the case back to the Court of Appeal to rule whether each branch of Woolworths was an establishment but it is very likely to restore the employment tribunal’s original decision on the issue. Until then, employers should be aware that the EAT’s decision is still good law and take advice if planning redundancies across different locations.