As we reported at the beginning of the month, on 20 November 2014 the ECJ heard legal arguments in the Woolworths’ case and two other cases, Lyttle & Others v Bluebird UK Bidco 2 Limited and Cañas v Nexea Gestion Documental & Another, on the question of when the obligations to inform and consult on collective redundancies are triggered. Today the Advocate General has given his opinion on the cases which, if followed by the ECJ, would mean that collective consultation is only required where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less; establishment meaning the local employment unit.
DLA Piper is advising on the Lyttle case, which arose out of the collapse of the Bonmarché chain of clothing stores. The facts were very similar to those in the Woolworths case; the employer went into insolvent administration, the administrators implemented an extensive redundancy exercise, no collective consultation was carried out and the employees brought claims for a protective award for failure to consult. In Woolworths the tribunal made a protective award only in respect of those employees who worked in stores employing 20 or more staff. However, on appeal the EAT held that UK law was not compliant with the European Collective Redundancies Directive (the Directive) and that the obligation to consult on collective redundancies should arise whenever there are 20 or more redundancies anywhere in the employer’s business (for more on the EAT decision see our Be Alert). The Court of Appeal (and the Northern Ireland Industrial Tribunal in Lyttle) made a reference to the ECJ to determine the proper meaning of the Directive.
The relevant provision of the Directive, Article 1(1)(a), provides member states with a choice of two possible definitions of “collective redundancy”:
- The dismissal, over a period of 30 days, of at least:
- 10 workers in an establishment with 21-99 workers.
- 10% of the workforce in an establishment with 100-299 workers.
- 30 workers in an establishment of 300 or more (Article 1(1)(a)(i)); or
- The dismissal, over a period of 90 days, of at least 20 workers, whatever the number of workers normally employed in the establishments in question (Article 1(1)(a)(ii)).
Unlike the majority of EU member states, the UK opted for the second definition, which is given effect in UK law by s.188 TULRCA, which provides that employers are obliged to inform and consult collectively where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. The effect of the EAT’s decision in Woolworths was to delete the words ‘at one establishment’ from s.188, resulting in significantly more onerous consultation requirements for employers.
The Advocate General’s opinion
The Advocate General (Wahl) has today published his opinion on the case which, if followed by the ECJ (as seems likely), will mean that the Court of Appeal in Woolworths should reinstate the UK law to the position prior to the EAT’s decision.
At the hearing on 20 November, arguments were put to the ECJ on behalf of USDAW, Bluebird, the European Commission, the UK Government and the Spanish Government. The Advocate General preferred the arguments put forward by David Reade QC, instructed by DLA Piper, on behalf of Bluebird, in particular the argument that inRockfon (the leading case on the interpretation of the term ‘establishment’ in the Directive) the ECJ made clear that the Directive applies to the local unit to which an employee is assigned. The Advocate General considered that although Rockfon was about the meaning of ‘establishment’ in Article 1(1)(a)(i) (ie the option not chosen by the UK), it would be “manifestly nonsensical” for ‘establishment’ to have a different meaning in Article 1(1)(a)(ii).
The Advocate General specifically rejected the argument put on behalf of the employees that the interpretation of ‘establishment’ as meaning the local employment unit is contrary to the purpose of the Directive. The Advocate General considered that the Directive is concerned with the socio-economic effects of collective redundancies in a given local context and social environment. Interpreting ‘establishment’ as the local employment unit is entirely consistent with that.
The ECJ’s full decision is likely to follow in approximately six months and is expected, although not guaranteed, to follow the AG’s opinion. If the ECJ does follow the AG’s opinion this will be a welcome return to the pre-Woolworthsposition. As David Reade QC, on behalf of Bluebird, argued at the hearing, the EAT’s decision in Woolworthscreated significant problems for large employers operating across many establishments; 20 separate redundancies at 20 separate establishments could trigger collective consultation requirements which could lead to employers having to collectively consult even though the reasons for the redundancies were disparate and separate. Large employers would have to constantly monitor their operations for any dismissal which might be categorised as a redundancy because of the risk that this could trigger collective consultation obligations. This places a huge administrative burden on employers. For employers with international operations, the EAT’s decision could even require collective consultation once the number of redundancies reaches 20 across all its EU operations. This would be manifestly unworkable given that each Member State has implemented different consultation triggers and could lead to an employee elsewhere in the EU being entitled to consultation under UK law but not under the laws of their own jurisdiction. The Advocate General’s interpretation of the law produces far more sensible results.