Under UK law, employers are required to consult collectively with employees where they propose to make 20 or more employees redundant at one establishment within a 90 day period.
After Woolworths went under in 2008, its 30,000 staff were made redundant. Given the speed of the store closures, there was insufficient time to consult collectively with employees. USDAW, therefore, brought claims on behalf of employees for ‘protective awards’ following a failure to consult collectively.
The ET and the EAT came to different conclusions about the test for collective consultation. Should 20 or more employees being made redundant be assessed across an entire business or on a store-by-store basis? If across an entire business, this would have a profound effect on organisations with large numbers of sites and would result in more regular collective consultation for those businesses.
The matter was referred to the Attorney General of the ECJ. The Attorney General’s view was that the EAT got it wrong. He held that an ‘establishment’ is the unit to which the redundant employees are assigned to carry out their duties. Therefore, it is unnecessary to aggregate dismissals across an entire business when determining whether to consult collectively.
This is good news for employers but with a word of caution. This is only an opinion and not yet law. In the meantime, we advise a cautious approach when deciding whether to consult collectively so as to avoid liability for protective awards which could be equal to 90 days’ gross pay.