Woolworths case – there’s still life in the old ‘establishment’ yet

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The Advocate General has given his opinion in the Woolworths case, concerning collective redundancy consultation. He thinks 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.

Background

Under UK law, employers have a statutory duty to consult employee or union representatives before implementing:

  • collective redundancies

  • collective dismissals and re-engagements intended to achieve a change in employment terms

According to the wording of UK legislation, the statutory duty to consult representatives is triggered when (and only when) an employer proposes 20 or more dismissals at one establishment in a 90 day period.  Consultation must begin:

  • in good time while proposals are still at formative stage

  • at least 30 days before the first dismissal, or 45 days where 100 or more dismissals are proposed

In USDAW v Ethel Austin, which involved the closure of all Woolworths stores in 2008, the Employment Appeal Tribunal (EAT) ruled that employers could not restrict the count of proposed dismissals to individual establishments. According to the EAT, the UK legislation had to be interpreted as if the words ‘at one establishment’ were deleted. Employers must therefore count up the proposed dismissals across all of their establishments. This was necessary to ensure compliance with the EU Collective Redundancies Directive. 

The Court of Appeal then referred the matter to the European Court of Justice.

The AG opinion

The Advocate General has now given his opinion in the Woolworths case, along with two other cases which raised similar issues - Lyttle v Bluebird (a Northern Irish case) and Canas v Nexia (a Spanish case).

In the Advocate General’s opinion, 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 Advocate General refers to ‘establishments’ as ‘local employment units’. He adds that it is up to national courts to decide what is a local employment unit.

It is now up to the European Court of Justice to making a final ruling.  If they follow the Advocate General opinion (and they usually do), it will mean that multi-site employers can go back to the pre-Woolworths position of approaching consultation over collective redundancies and dismissals on a more local basis.

Immediate implications for employers?

The AG opinion is clearly very good news for multi-site employers in the UK.  However, unfortunately it is not legally binding, and we will need to wait for the final word from the court.

Until then, the safest approach is to continue applying the EAT ruling in the Woolworths case. For multi-site employers, this means:

  • taking account of proposed dismissals at all sites within a 90 day period when deciding if the trigger levels of 20 and 100 dismissals are reached

  • not assuming that you can necessarily deal with redundancies or changing terms on a site by site basis

  • taking account of dismissals at other sites even when they are unconnected (unless the employees are employed by a different legal entity at that site or collective consultation has already begun)

  • ensuring that you keep on top of restructuring plans across the business (a major HR headache in itself)

  • disclosing the right information to the representatives at the start of the consultation process

We will be looking at the Advocate General opinion in more detail in our forthcoming Employment Law Updates. Find out more and book your place.

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