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In preparation for the European Court of Justice (ECJ) decision, the Advocate General has given his opinion in an important case, suggesting that, for the purposes of collective consultation, 'establishment' means the local employment unit to which the workers made redundant are assigned.
Under domestic law, employers are obliged to inform and collectively consult where they propose to dismiss, as redundant, 20 or more employees at one establishment within a period of 90 days or less. The case of USDAW and another v WW Realisation 1 Ltd (in liquidation) has considered the meaning of the words 'at one establishment'.
The case relates to Woolworths and Ethel Austin, who went into administration in November 2008 and March 2010 respectively, resulting in large-scale redundancies. The employees bought claims arguing that there had been a failure to carry out collective consultation regarding their redundancy and that they should be entitled to a protective award as a result. On behalf of the employers, the argument was raised that the obligation to collectively consult had not been engaged in respect of stores with fewer than 20 employees, and so those employees were not entitled to a protective award.
In July 2013, the Employment Appeal Tribunal found in the employee's favour, holding that the words 'at one establishment' were incompatible with the European Collective Consultation Directive, so the words 'in one establishment' should be disregarded for the purposes of a collective redundancy involving 20 or more employees.
At the time, this case caused a great deal of concern in light of the impact on redundancy planning. The case was appealed and the Court of Appeal referred it on to the ECJ for a decision.
The Attorney General has now issued an opinion to suggest that the ECJ is likely to return the law to how it was previously. This would mean that employers would not have an automatic need for collective consultation where 20 or more redundancies are proposed across the business nationwide, but would be able to argue that different locations were a different establishment for collective consultation purposes, therefore not triggering the collective consultation obligations.
This opinion is not binding and we await the judgment of the full court, which is likely to come through later in the year.
Employers who are planning a redundancy process should consider the impact of this opinion carefully. Until the final decision is made by the ECJ, caution will still be required when considering when the obligation to collectively consult will be triggered.