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Collective Redundancy

USDAW v Woolworths

Remember the Woolworths and Ethel Austin case? It has been weaving its way through the courts for some time and now, finally, we have the European Court of Justice’s (ECJ) decision.

The issue was to do with collective redundancy consultations. Employers must carry these out where they are proposing 20 or more redundancies at any establishment within a 90-day period. It is quite onerous, involving at least 30 days’ consultation with recognised unions or – where you do not recognise a union – at least 30 days’ consultation with employee representatives specifically elected for that purpose.

What does “establishment” mean? Does it mean the store in which the workers are employed to work? Or do all of a business’ stores count as one establishment?

The Employment Appeal Tribunal had decided the latter. That meant that if an employer proposed 20 or more redundancies across its entire operation within 90 days then individuals involved would be entitled to be consulted collectively.  That state of play did not go down well and so the ECJ’s decision to reverse the situation will be welcomed by employers.

The position is quite clear now, after two years of uncertainty. “Establishment” means the place where the workers are assigned to work. This will normally (but not always) mean each office/shop/factory/site – so collective consultation obligations only kick in when you are proposing to dismiss 20 or more people in a particular office/shop/factory/site.

More importantly, collective consultation obligations will not apply where you will be dismissing fewer than 20 employees in one place, even though you may be dismissing more than 20 in total across your business – provided each establishment is considered to be separate. It means that employers with lots of small branches or bases may be more easily able to reduce staff numbers by avoiding lengthy consultations and associated costs.