Background

Section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA“) states that where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult appropriate representatives of any of the employees who may be affected by the proposed dismissals. The concept of establishment in TULRCA derives from the European Collective Redundancies Directive (the “Directive”).

Facts

Woolworths plc (“Woolworths“) employed over 27,000 employees in 814 stores across the UK. On 27 November 2008, Woolworths went into administration and it subsequently went into compulsory liquidation in November 2010.

On 16 December 2008, the joint administrators informed the Union that employees were potentially at risk of redundancy. When a buyer did not materialise, by January 2009, all Woolworths’ stores had closed and its retail employees had been made redundant.

The Union filed a claim against Woolworths citing breach of the collective consultation obligations under section 188(1) and by analogy Article 1(1)(a) (ii) of the Directive. The Employment Tribunal upheld the breach of section 188 and made protective awards of 60 days’ pay for each affected employee. Importantly, the protective award expressly excluded those employees employed at stores with fewer than 20 employees on the basis that these constituted separate establishments for the purposes of TULRCA. The Union appealed.

Judgment

The Employment Appeal Tribunal (“EAT“) found in favour of the Union and held that the protective award should be paid to all employees, irrespective of their location. The concept of “establishment”, they said, was incompatible with the Directive and had no meaning under UK law.

Comment

On the face of it, the EAT decision represents a significant change to an employer’s obligations in a collective redundancy consultation process. An employer proposing to make 20 or more redundancies (or to change terms and conditions where 20 or more employees could be affected) anywhere within its business should now consider following collective redundancy consultation obligations to be on the safe side. More will be known when the formal written judgment is issued by the EAT.

Employers (particularly larger employers with complex structuring) should look at how they can monitor group- wide redundancy levels across their organisation to ensure, when aggregated, that the overall number does not inadvertently tip them into collective consultation.

Subject to a successful appeal by the administrators, there is a risk that recently redundant ex-employees may now look to litigate against their former employer for breaches of TULRCA.