A final twist in the Woolworths collective redundancy saga?
Many will be well aware of the twists and turns of the USDAW and others v WW Realisation 1 Ltd case which has progressed all the way from tribunal to the European Court of Justice (CJEU). Now, in what employers will hope is the final change, the CJEU has come out in support of the pre-Woolworths status quo – meaning collective redundancy consultation obligations are only engaged if 20 or more redundancies are proposed at any one establishment.
The existing situation pre-CJEU
As summarised in our earlier blog, the EAT had decided that the words ‘at one establishment’ should be disregarded from section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (‘TULRCA’). This was on the basis that section 188 was incompatible with the EU Directive on collective redundancies. TULRCA requires 20 or more dismissals to take place at one establishment in a period of 90 days for the collective consultation requirements to apply.
This meant that the duty to consult collectively in redundancy situations was triggered when an employer proposed to make 20 or more redundancies in any 90 day period, regardless of where the employees work. This was a dramatic, controversial departure from the previous line of thinking which had restricted the assessment to distinct ‘establishments’ – most commonly the one site or shop.
This had a significant impact on employers. Faced with the risk of a protective award claim (up to 90 days’ pay per employee), some included all potentially redundant employees in the numbers when assessing whether the 20 dismissal threshold had been met, regardless of where the employees worked.
The CJEU decision
The CJEU found that:
- ‘Establishment’ means the single entity to which the workers are assigned to carry out their duties. It does not refer to the employer as a whole.
- When establishing headcount to work out if the collective redundancy obligations are triggered, each ‘establishment’ should be looked at separately.
- This is the position even though it might mean uneven protection between employees in large and small sites.
- To be a separate ‘establishment’, it is not essential that the unit or entity has its own management which can independently affect collective redundancies.
- TULRCA is compatible with the EU Directive.
The Court of Appeal will now be asked to determine whether the tribunal was correct to decide that each Woolworths store was a separate establishment. If it does, around 4500 employees will lose their right to claim a protective award.
What does this mean?
This is a welcome return to the old law for many, especially those operating across multi-sites, who for the past two years had been unsure exactly how to work out when the 20 employee threshold had been reached. It is now clear (subject to the Court of Appeal’s decision) that there is no need to calculate redundancies in a large-scale redundancy exercise across the whole business. As was the case pre-2013, employers can be confident that they need only take account of proposed redundancies in each separate establishment. If less than 20 redundancies are proposed at any one establishment, there is no requirement to collectively consult with those employees (regardless of the overall total number of proposed dismissals across the business).
Employers still need to work out what exactly amounts to an ‘establishment’ within their business though. Sometimes each site or shop will be a distinct entity. At other times different workplaces require to be considered together as one ‘establishment’, for example because of a shared management structure or the fact that employees work between the two sites.
Although many consider the matter settled, the CJEU decision is still to be considered by the Court of Appeal which could yet provide another twist. This is considered unlikely though, given the strength of the CJEU’s decision.
Separately, last month the Insolvency Service called for evidence on collective redundancy processes, meaning further changes could yet be on the horizon. We will let you know of any developments.
How can we help?
Every business and each redundancy situation is different. If you are involved in a collective redundancy exercise and are in any doubt about the risks involved and the process to follow, please get in touch.
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