The Advocate General has now issued his opinion in the ‘Woolworths’ collective redundancy case. If confirmed by the European Court of Justice, it could significantly reduce employers’ potential redundancy consultation liabilities when they make large scale redundancies.
UK legislation says that the obligation to collectively consult arises when an employer proposes to make 20 or more redundancies within 90 days at one establishment. However, the EAT in the ‘Woolworths’ (USDAW v. Ethel Austin Ltd (in administration)) case held that this didn’t reflect the wording in the EU Collective Redundancies Directive, from which the UK legislation derives. The EAT had said that it was necessary to count redundancies made at all establishments when deciding whether the collective consultation obligation arose. The effect of the EAT’s decision is that multi-site employers making redundancies across their organisation are far more likely to trigger the obligation to consult collectively. This has significant implications for employers, not least because an employer who fails to collectively consult properly can be liable for up to 90 days’ uncapped pay for every affected employee.
The Advocate General disagrees with the EAT’s approach. Crucially, he points out that the Directive is intended to mitigate the impact of collective redundancies in a local area. The focus is therefore on redundancies made in a particular establishment, not across the whole organisation.
The Advocate General’s opinion is not binding, so unless and until the ECJ formally overrules it, the EAT’s ‘all establishment’ test remains in force. However, the Advocate General’s opinion is a welcome development for employers. If ratified by the ECJ, it will mean that collective consultation obligations will only apply to larger establishments where there are sufficient numbers of affected employees.
The ECJ’s decision in this case is anticipated later in 2015. The ECJ agrees with the Advocate General about 80% of the time – something from which many employers will take comfort.