In the latest twist in a much talked-about case, Europe’s Advocate General has upheld the UK’s long-standing view on collective redundancy.

In the latest twist in a much talked-about case, Europe’s Advocate General has upheld the UK’s long-held view on collective redundancy.

The Advocate General today gave his opinion in the important UK cases involving Woolworths and Ethel Austin employees.

He concluded that the UK is entitled to retain its view that it is only where an employer proposes 20 or more redundancy dismissals within 90 days “at one establishment” – broadly one location – that the obligation to collectively consult is triggered.

Opinions are not legally binding, but they are often indicative of the approach the European Court of Justice will take when it issues its decision, which is likely to be later this year.

What was the law prior to these cases?

UK law stated that where an employer proposes to make 20 or more employees at one site redundant within 90 days, then they are obliged to collectively consult.

It has always been the case that, depending on the particular facts, employees working across different sites or locations could usually be deemed to be working at single, separate establishments so that the need to consult collectively on redundancies was less frequent.

Failure to inform and consult in the correct manner can result in up to 90 days’ pay being awarded to affected employees as a protective award.

What was being argued?

Although most Woolworths employees who were made redundant when the retailer collapsed succeeded in winning protective awards, those employed at smaller stores – with fewer than 20 staff – missed out because each store was defined as a different “establishment”.

They appealed, and the Employment Appeal Tribunal (EAT) held that the existing UK law did not correctly apply EU law. There was no need to show an employee’s ‘establishment’ to determine whether collective redundancy obligations were triggered, with the effect that 4,400 more workers – who had worked in the two (now insolvent) businesses in establishments with fewer than 20 employees – were entitled to protective awards for lack of consultation.

What is the position now for retailers?

According to the Advocate General’s opinion the UK Government had implemented the EU law correctly. Its interpretation of an ‘establishment’ was consistent with the Directive and will depend on the particular facts and pre-existing case law in this area.

This opinion is not binding, though. The ECJ will review the case and reach its own decision later this year, and at this point retailers will need to finally reassess their processes. Should the ECJ ruling mirror the opinion then employers may potentially revert to the pre-Woolworths practices that they were familiar with – assessing numbers of proposed redundancies by establishment.

In the meantime, the EAT decision still stands. Retail employers should usually continue to adopt a conservative approach and aggregate numbers of potentially redundant employees across different locations and sites. If proposing to make 20 or more dismissals within 90 days, regardless of where the employees are based, it would be prudent to adopt a collective redundancy process.

  • Kathryn Clapp, senior professional support lawyer at Taylor Wessing

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