The European Advocate General has today given his opinion in the “Woolworths case” (and two other cases) on the meaning of “establishment” for the purposes of determining when the duty to consult appropriate representatives is triggered under the European Collective Redundancies Directive (the Directive).
The good news for insolvency practitioners (IPs) faced with potential consultation is that the Advocate General has confirmed taking the approach of “at one establishment” is a legitimate position for the UK Government to have adopted when introducing the Directive into UK law.
Readers may recall that last year the Employment Appeal Tribunal controversially ruled that the words “at one establishment” in the relevant employment legislation should be disregarded when deciding whether the duty to carry out collective redundancy consultation applies. In other words, if a company was proposing to dismiss 20 or more employees as redundant within a period of 90 days or less, irrespective of where those employees were based, then the company must ensure it complied with its collective consultation obligations or run the risk of a protective award being made against it. The point was referred to the European Union’s Court of Justice (ECJ).
According to the Advocate General, the limb of the Directive relied upon by the UK Government when it implemented the Directive did not require employers to consult collectively whenever they proposed to dismiss as redundant 20 or more employees situated anywhere across their UK business within a 90-day period. It is legitimate for employers only to consult collectively when they are proposing to dismiss 20 or more employees at one “establishment” within this period. In the Advocate General’s view, “establishment” for these purposes means: “the unit to which the workers made redundant are assigned to carry out their duties, which it is for the national court to determine”.
The Advocate General accepted that if his Opinion is correct this would mean that some workers dismissed in the course of the same restructuring exercise would not be protected (one of the key submissions in the Woolworths case). In his view such a possibility was not contrary to the Directive, as the aim of the Directive was not to provide full protection for all employees but to provide a certain minimum level of protection in certain scenarios (as clearly evidenced by the fact that the duty is only triggered when 20 or more dismissals are proposed in a 90-day period).
Whilst the Advocate General’s Opinion is only his view and it is not binding law nor is it binding on the ECJ, the ECJ does usually (but not always) follow the Advocate General’s Opinion. There is reason for IPs to be optimistic about a favourable ECJ decision with a return to the position pre the Woolworths case with a favourable interpretation of “one establishment”. This will mean that the UK Employment Tribunals will be required to undertake a fact-finding exercise as to whether one or more locations should be counted as “one establishment” for the purposes of the totting-up exercise under the relevant UK legislation. However, in the meantime we remain in a state of uncertainty, with a binding EAT decision in the Woolworths case that has now been undermined (but not legally overturned) by the Advocate General’s Opinion.