The Advocate General on 5 February gave an Opinion in the highly important UK cases involving Woolworths and Ethel Austin employees. In the latest twist, he concluded that the UK is entitled to retain its long held view that it is only where an employer proposes 20 or more redundancy dismissals within 90 days "at one establishment" that the obligation to collectively consult is triggered.
While Opinions are not legally binding, they are often indicative of the approach the European Court of Justice will take when it issues its Decision, which is likely to be later this year.
What was the law prior to these cases?
UK law stated that where an employer proposes to dismiss 20 or more employees for redundancy within 90 days at one establishment then it is obliged to collectively consult employees. It has always been the case that, depending on the particular facts, employees working across different sites or locations could usually be deemed to be working at single, separate establishments so that the collective redundancy obligations less frequently apply. Failure to inform and consult may result in up to 90 days' pay being awarded to affected employees as a protective award.
What was being argued?
A significant shift in the law had taken place with the Employment Appeal Tribunal's (EAT) decision in the "Woolworths" case. Although most Woolworths employees who were made redundant when the retailer collapsed succeeded in winning protective awards, those employed at smaller stores with fewer than 20 staff missed out on the award because each store was defined as a different "establishment". They appealed and the EAT held that the existing UK law did not correctly apply EU law. There was no need to show an employee's "establishment" to determine whether collective redundancy obligations triggered. This ruling had the effect that collective redundancy obligations applied regardless of whether the 20 or more affected employees were employed at the same or different locations. By deleting the need for an "establishment" test 4,400 more workers who had worked in the two, now insolvent, businesses in establishments where it was proposed to make fewer than 20 employees redundant, were entitled to protective awards for failure to be collectively informed and consulted.
What is the position now?
The Advocate General stated that in his opinion the UK government had implemented the EU law correctly. Its interpretation of an "establishment" was consistent with the Directive. The definition of an "establishment" for these purposes will depend on the particular facts and pre-existing case law in this area. This opinion is not binding. Often opinions are influenced by political factors – here, perhaps, the current trend towards "subsidiarity" or letting member states determine their implementation of EU rules with as much freedom as possible.
What happens next?
The ECJ is likely to make a Decision later this year. It is at this point employers will need to finally reassess their processes and potentially revert to pre - Woolworths practices of looking at numbers of proposed redundancies by establishment that employers were familiar with in the past.
In the meantime, the EAT decision still stands. This means that employers should usually continue to adopt a conservative approach and aggregate numbers of potentially redundant employees across different locations and sites. If proposing to make 20 or more dismissals within 90 days, regardless of where the employees are based, it would be prudent to adopt a collective redundancy process. This would also apply in relation to the requirement to consult where there is a change in the terms and conditions for 20 or more employees within 90 days.