The European Court of Justice (ECJ) has today handed down its decision in the highly important UK cases involving former employees of the Woolworths and Ethel Austin retail chains, confirming that collective redundancy consultation is required only at those establishments where it is proposed to dismiss 20 or more employees.
What was the law prior to these cases?
UK law stated that where an employer proposes to dismiss 20 or more employees for redundancy within 90 days at one establishment, then it is obliged to collectively consult the employees through elected representatives. It has always been the case that, depending on the particular facts, employees working across different sites or locations could usually be deemed to be working at single, separate establishments, so that the collective redundancy obligations did not apply. Failure to inform and consult may result in up to 90 days' pay being awarded to each affected employee as a protective award.
What was being argued?
A significant shift in the law had taken place with the Employment Appeals Tribunal's (EAT) decision in the "Woolworths" case. Although most of the 27,000 Woolworths employees who were made redundant when the retailer collapsed succeeded in winning protective awards, about 3,300 were employed at smaller stores with fewer than 20 staff. A further 1,200 Ethel Austin employees were similarly affected because they too worked in smaller stores. As each store was defined as a separate "establishment", the original employment tribunal held those employees missed out on the award. They appealed that decision and the EAT held the existing UK law did not correctly apply EU law. In fact, said the EAT, there was no need to show an employee's "establishment" to determine whether collective redundancy obligations were triggered. This ruling had the effect that collective redundancy obligations applied regardless of whether the 20 or more affected employees were employed at the same or different locations.
The Court of Appeal referred the question to the ECJ. The Advocate General of the ECJ stated that in his opinion, the UK government had implemented EU law correctly and its interpretation of "establishment" was consistent with the EU Collective Redundancies Directive. The ECJ has given its final judgment today and confirmed that it is not necessary to aggregate dismissals across all establishments for collective consultation purposes. The ECJ observed that since the Woolworths and Ethel Austin employees were working at stores across the UK, the employment tribunals took the view that the stores were each separate establishments.
What happens now?
The cases will return to the UK's Court of Appeal, which has to determine whether the stores are separate establishments or not. Although the ECJ has not said that each store should be a single establishment, its judgment suggests that this would be permissible. That decision will depend on pre-existing case law and the particular facts of each case.
The case means that employers looking to make 20 or more dismissals, or to change terms and conditions for 20 or more employees, within 90 days may no longer need to take the cautious approach of collective consultation across the business as a whole. When the Court of Appeal applies the ECJ guidance to the detailed facts we will have more clarity for UK employers. It looks likely that where sites have some management structure or clear identity stores and similar workplaces will be viewed as separate establishments. Where there is an "agile business", such as one run across sites, or with mobile workers, that may not the case.