In the UK, under the Trade Union and Labour Relations (Consolidation) Act 1992 (which implements an EU directive), if an employer intends to dismiss 20 or more employees as redundant within a period of 90 days or less at one establishment, the employer will have a duty to collectively consult with employee representatives. The meaning of ‘establishment’ has been the subject of ongoing litigation.
In July 2013, the Employment Appeal Tribunal (the EAT) in the case of USDAW and another v Ethel Austin Ltd (in administration) and others decided that the words ‘one establishment’ in the UK legislation should be disregarded so that the obligation to collectively consult would arise where an employer was proposing to make redundant 20 or more employees regardless of whether this was at one establishment. In other words, if an employer intends to make 20 or more redundancies across its entire business, the employer will have a duty to collectively consult even if at each individual establishment, fewer than 20 redundancies are proposed.
In the latest instalment of the litigation, the Court of Appeal and other courts across the European Union asked for guidance on the meaning of ‘establishment’ from the Court of Justice of the European Union (the CJEU). Advocate General Wahl has now issued an opinion on the matter prior to the CJEU handing down its own judgment later this year.
The Advocate General’s opinion is in line with the prevailing legal position in the UK before the EAT’s 2013 decision.
The Advocate General’s view is that ‘establishment’ means a unit to which workers made redundant are assigned to carry out their duties – in other words, the local employment unit – which it is for each member state to determine. The EU directive does not require aggregating the number of dismissals in all the employer’s establishments to determine whether the relevant number threshold (20 in the UK) is met. Therefore, if fewer than 20 redundancies are planned in one individual establishment, there will be no duty to collectively consult even if across the country more than 20 redundancies are planned altogether.
The Advocate General was careful to note that it is for the domestic courts to determine how a local employment unit is constituted. In his view, it would not be inconceivable for several of one employer’s stores within one shopping centre to form one local employment unit and therefore one establishment for collective redundancy purposes.
This opinion is likely to be a welcome relief for employers in the UK as it may be indicative of the CJEU’s upcoming judgment. However, the EAT’s decision for the time being remains binding so employers would be advised to continue to follow it before the CJEU’s judgment is known.