There appears to be a crucial change to the threshold for calculating when employers must consult employee representatives on making employees redundant. It is being reported that the Employment Appeal Tribunal (EAT) in USDAW and others v WW Realisation 1 Ltd (in liquidation) combined with USDAW v Ethel Austin Ltd (in administration) has removed the requirement that, for dismissals to count towards the 20+ limit, they must be at a single "establishment".

The change means that if employers are proposing to make 20 or more employees redundant across their business as a whole, the requirement is triggered. This, coupled with the existing rule that "redundant" for this legislation includes, for example, dismissal for refusing to accept a change in terms of employment, means that employers will have to consult employee representatives in many more situations.

How could the EAT ignore the "at one establishment" proviso in the UK legislation? Until we see the judgement, we cannot be certain as to either the decision or the EAT's reasoning. However, the most likely explanation is this:

Section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 provides 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 about the dismissals ... appropriate representatives of ... the employees ..."

This comes from article 1(a) of the EU's Collective Redundancies Directive. The rule allows national governments to define the threshold for consultation as either -

  1. : where the number of redundancies is either, over a period of 30 days:
  • at least 10 in establishments normally employing more than 20 and less than 100 workers,
  • at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers,
  • at least 30 in establishments normally employing 300 workers or more; OR
  1. where the number of redundancies is, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question.

If one compares the UK legislation with the Directive, it is clear that the UK has cherry-picked from both alternatives in the Directive: 20+ redundancies per establishment over 90 days. The problem is the second alternative test ('B' above) refers to "establishments" (plural): it's simply an overall number, presumably across the employer's business as a whole.

Commentators and indeed litigants spotted this odd hybrid many years ago. In 2002, in MSF v Refuge Assurance, the EAT acknowledged that the UK's approach did not appear to be allowed by the Directive: the UK had an "either/or" approach; it wasn't supposed to fudge. However, in that case, the EAT held it did not have the power to unpick Parliament's drafting.

It now looks as if they have changed their mind. This case stems from the insolvency of Woolworths and Ethel Austin. When the chains went bust there was collective consultation, but each store was treated as a single establishment. Therefore, there was only collective consultation at the larger stores where 20+ employees lost their jobs: smaller stores were left out of the process.

The Employment Tribunal agreed with this approach at first instance, but late last week the EAT appears to have overturned its decision. It seems to have held that there should have been collective consultation with all employees, regardless of the number employed at any one store.

Alas, there is no written judgement. The case was brought by USDAW, the shop-workers union. The only detail we have comes from a press release from its lawyers, Slater & Gordon, which says:

"the Appeal Tribunal ... ruled that the words "at one establishment" are here and after to be disregarded for the purposes of any collective redundancy involving more than 20 employees, meaning that once it is proposed that more than 20 employees in a single business are to be made redundant, their location becomes irrelevant."

So, we don't know the full implications of the decision. As soon as it is available, we shall analyse it further.

A decision of this significance may also be appealed. We do not know yet if that is likely: not even the parties have the written decision yet and in any event there may not be the money in the insolvencies to make an appeal worthwhile.