Woolworths case – European Court of Justice restores the ‘establishment’ test for collective consultation

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The European Court of Justice has announced a summary of its judgment in the controversial Woolworths case, concerning collective redundancy consultation.  They have ruled that the UK is not in breach of EU law by looking at each ‘establishment’ separately when calculating if the requirement to carry out collective consultation is triggered.

For a detailed background to this case, see here.

In summary, the requirement to carry out collective consultation is triggered if an employer proposes 20 or more dismissals over 90 days. The controversy relates to whether you can restrict the count of proposed dismissals to individual establishments (or shops, on the facts of the Woolworths case). The wording of the UK legislation says that you can, but the Employment Appeal Tribunal (EAT) in the Woolworths case said that you could not.

The ECJ has now ruled that the EU Collective Redundancies Directive does not require aggregating the number of dismissals across all establishments for the purposes of calculating whether the collective dismissals threshold is reached.  The Directive allows Member States to restrict the count of proposed dismissals to individual establishments.

The ECJ ruled that 'establishment' must be given the same meaning throughout the EU (in contrast to the earlier opinion of its Advocate-General, who thought it was up to the national courts to reach a national definition).

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According to the ECJ, establishment means ‘the entity to which the workers are assigned to carry out their duties’. No doubt this definition will cause further litigation but, generally speaking, it means the local site. (The Advocate-General talked in terms of ‘local employment unit’). The ECJ said it is up to the UK courts to decide if each Woolworth store was an ‘establishment’.

The 2013 Employment Appeal Tribunal (EAT) ruling that you cannot look at each establishment separately is effectively overruled by this ECJ decision.  In other words, multi-site employers can go straight back to the position as it was before the 2013 EAT ruling in Woolworths of approaching any future consultation exercises over collective redundancies and dismissals on a more local basis.

The ECJ has formally referred the case back to the UK Court of Appeal, but their decision on the correct interpretation of the law must now be foregone conclusion:

  • the UK is not in breach of EU law in using the ‘establishment’ test
  • the requirement to carry out collective consultation is therefore triggered when (and only when) an employer proposes 20 or more dismissals at one establishment in a 90 day period
  • the EAT was wrong to rule otherwise

Employers will also be pleased to note that they can go back to filing HR1 forms on an establishment by establishment basis.

The full text of the judgment will be published imminently. We will update our guidance in the resources area of the website as soon as possible.

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