CIPD: Establishment’ defined as unit to which employees are assigned. The Court of Justice of the European Union (CJEU) has delivered its long-awaited opinion in the ‘Woolworths’ case. Under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), which derives from the European collective redundancies directive, employers must collectively consult where they propose to dismiss as redundant 20 or more employees at a one establishment. If an employer fails to do this, each employee may be entitled to a tribunal protective award (compensation) of up to 90 days’ gross pay.
Consultation must begin “in good time” under the rules although certain minimum time periods apply depending on the number of redundancies proposed. Where 100 or more redundancies are proposed, consultation must begin at least 45 days before the first dismissal takes effect. For fewer than 100 redundancies, the minimum period is 30 days.
The limitation on numbers at one establishment has meant that often collective consultation requirements have not been triggered where, for example, a business had a chain of shops and fewer than 20 employees were made redundant in each individual shop.
In the case USDAW and Wilson v WW Realisation 1 and Ethel Austin, the retailer WW Realisation, trading as ‘Woolworths’, went into administration and made multiple redundancies without consulting the employees concerned. An employment tribunal made protective awards for the employees but excluded those made redundant in shops where fewer than 20 workers were dismissed. The excluded employees appealed.
On appeal, the Employment Appeal Tribunal ruled that TULRCA was inconsistent with the directive and the limitation of ‘at one establishment’ should be disregarded when carrying out consultations. This meant that when considering collective consultation requirements, the whole business needed to be looked at, not just the individual locations where the employees were based. The consequence of this decision was a protective award to thousands of redundant employees.
Unsurprisingly, the liquidators for the Woolworths and Ethel Austin retail chains, with intervention from the UK government, appealed this decision to the Court of Appeal which referred the ‘establishment’ question to the European court.
In February, the European Advocate General (AG) gave an opinion on the matter. This stated that an ‘establishment’, for the purposes of working out if collective consultation requirements are triggered, is the unit to which the redundant employees were assigned to carry out their duties. He went on to say that this was a matter for national courts to decide, based on the facts in each case. However, the AG did not rule out the possibility that, on the facts, several shops within one shopping centre could still be viewed as a single unit.
The Court of Justice of the European Union has now confirmed that it is in agreement with the AG. For the purposes of determining whether collective consultation requirements are triggered, an ‘establishment’ is the entity to which the workers made redundant are assigned to carry out their duties. In this particular case, if each store is considered a separate establishment, and fewer than 20 redundancies were made at each store, then the collective consultation requirements will not be triggered for the employees who worked in those stores.
This takes the law back to the pre-Woolworths position. However, what is or is not an ‘establishment’ will depend on the facts in each case, and matters such as whether or not a store is a distinct entity, and has permanence and stability, will be relevant as will whether or not the employees were assigned to work in one particular store rather than across the entire business.
While the decision will undoubtedly be welcome by employers, collective consultation still remains one of the trickier areas of the law.
Sarah Rushton is a partner in law firm Moon Beever