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Collective redundancy consultation – a change in the law

The judgment in USDAW and others v WW Realisation 1 Ltd (the Woolworths case) was issued yesterday. The Employment Appeal Tribunal decided that the duty to consult collectively in redundancy situations is triggered when an employer proposes to make 20 or more redundancies in any 90 day period, regardless of where the employee’s work. On the face of it, this means that it no longer matters whether the employees are based at one establishment or are spread out over a number of smaller sites.

The EAT 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 is on the basis that section 188 is incompatible with the EU Directive on collective redundancies. TULRCA requires 20 or more dismissals to take place at one establishment for the collective consultation requirements to apply. The Directive looks at the overall numbers rather than taking a site by site approach.

This means that over 3000 Woolworths employees (and 1200 Ethel Austin employees, whose case was decided at the same time) who did not receive a protective award as they worked in shops employing less than 20 employees will now be entitled to an award.

This is a hugely significant decision. Pending any appeal, employers have two choices: either continue as before (i.e. calculating the number of redundancies at each establishment separately) and risk a protective award claim of up to 90 days’ pay per employee; or include all potentially redundant employees (regardless of where they work) in the numbers when assessing whether the 20 (or 100) employee threshold has been reached.

Every organisation 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 whether to continue with the current process, please get in touch.

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