The EAT's judgment in USDAW v Ethel Austin (in administration), re-writes s188 Trade Union and Labour Relations (Consultation) Act 1992 in order to make the legal rules on collective consultation compatible with European law.
European law requires consultation if at least 20 employees are to be made redundant within 90 days, whatever the number of workers at any particular ‘establishment’. UK law only requires consultation where 20 more employees are to be made redundant ‘at one establishment’.
This case arose out of the demise of Woolworths which had a chain of 90 stores and a head office. Upon the company's liquidation, hundreds of employees were made redundant without a collective consultation. Employees employed at locations (‘establishments’) with 20 or more employees, were entitled to claim the protective award for failure to consult, this applied to around 400 employees. In contrast, the remaining 1,210 employees were entitled to nothing, because they were employed at locations with fewer than 20 staff.
The EAT decided that this is not what the European Directive intended. The words ‘at one establishment’ should be deleted from UK law or the phrase ‘at one establishment’ should be broadly interpreted to mean the whole of the relevant business.
Points to note –
- This is a radical change in the law on collective consultation. It means that employers can no longer simply operate on a site-by-site basis when deciding whether the duty to consult about impending redundancies has been triggered.
- Because Woolworths was now in liquidation, the employer was unrepresented at this hearing and so this decision is unlikely to be appealed.