An Advocate General (AG) of the EU Court (ECJ) has given his Opinion on the correct interpretation of the Collective Redundancies Directive. The issue at stake is whether the 20 employee trigger for collective redundancy consultation applies per employer or per establishment. This follows the Employment Appeal Tribunal’s decision in the Ethel Austin (Woolworths) litigation which decided it was the former, contrary to the wording of UK legislation and years of practice.
In a surprise move which will be welcomed by employers, the AG is against the aggregation of redundancies across the employer, as favoured by the EAT, deciding that the Directive uses the word “establishment” as a local employment unit, not the entire employer. If the Court follows the Opinion (a judgment is expected later this year), UK law will settle back to the 20 or more at “one establishment” trigger for consultation. However, it may reach a different outcome, given the policy reasons put forward by the AG which may not find favour with the Court.
How has this come about?
The EU Collective Redundancies Directive provides two options for member states to frame how the consultation duty is triggered. The second option, adopted by the UK, triggers the duty to consult representatives when the number of contemplated redundancies is ‘over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question’.
The EAT decided that the correct interpretation of this option requires consultation when 20 or more employees are to be dismissed by an employer, irrespective of where they work. On appeal, however, the Court of Appeal asked the ECJ whether the EAT’s approach was correct, or whether the trigger is in fact 20 or more redundancies in a particular establishment.
In the AG’s Opinion, the Directive does not require aggregating the number of dismissals in all the employer’s establishments for the purpose of triggering the duty to consult.
What happens next?
- Legally: We await the ECJ’s judgment (the Court often follows the AG’s Opinion, but not always), after which the case returns to the Court of Appeal.
- Practically: Following the EAT’s decision, many multi-site employers have proceeded on the basis that there is no longer an ‘at one establishment’ test when planning for 20 or more redundancies within a 90 day period, to mitigate risk pending the appeal outcome. While today’s Opinion provides some hope of a return to the status quo before the EAT’s decision, it is not legally binding and employers should be cautious about making any changes until we have the Court’s judgment later this year.
This see-sawing approach to fundamental points of UK employment law is unsatisfactory and many employers will find the ongoing legal uncertainty a real concern. It has the potential to destabilise employee relations and employers run the risk of protective awards, potentially running into hundreds of thousands of pounds, if they find themselves on the wrong side of the law, when it is finally resolved – and that might not happen until next year.