The high street retailers Woolworths and Ethel Austin went into administration in 2008 and there were large scale redundancies. But tribunal awards were only made to employees who worked at stores with 20 or more employees. For stores with fewer than 20 employees, the duty to inform and consult did not arise. As a result, around 4,400 employees who worked in such stores received no award.
USDAW, the Union which represented the affected employees, appealed the decision. The EAT found that the words ‘at one establishment’ contained in the UK legislation should be disregarded as incompatible with the applicable European directive and employees in the whole business should be counted.
On appeal, the Court of Appeal referred the cases to the European Court of Justice which found that ‘establishment’ meant ‘local employment unit’. It also found that it was not necessary for the unit to have independent management. It was permissible to find that employees in different stores were in separate establishments. On this basis, the Court of Appeal is likely to overturn the EAT’s finding.
This decision is very good news for multi-site employers who have faced uncertainty for a long time about their redundancy obligations. The requirement for collective consultation arises when an employer proposes 20 or more dismissals at one establishment in a 90 day period. However, a number of small sites can be classed as "one establishment" so an assessment on a case by case basis is still needed.