Collective Consultation – Can you count to 20? article banner image

It should, you’d think, be easy to know when you need to consult collectively with your employees – all you need to do is count to 20. The duty to carry out collective consultation applies where an employer proposes making 20 or more redundancies at one establishment within a 90 day period.The case law that followed from the collapse of Woolworths brought into sharp focus what is actually meant by “one establishment”.

Business people in motion


The EU Directive from which the UK duty is derived does not refer to the redundancies needing to be at “one establishment” and it has been widely accepted for some time that the UK legislation is incompatible with the EU Directive. However, the courts were unwilling to adopt an interpretation of our legislation to make it compatible and instead, over time, case law developed a series of tests for determining the meaning of “establishment”.

The decision of the Employment Appeal Tribunal (EAT) in USDAW v Ethel Austin Ltd (in administration) (the ‘Woolworths case’) changed all that. The ‘Woolworths case’ concerned claims brought by employees who were made redundant from stores with fewer than 20 employees. They argued that notwithstanding the number of employees in their stores, the collective consultation duty should have applied given the overall number of redundancies being made. The tribunal disagreed, finding that each store should be viewed as a separate establishment and so if a store had fewer than 20 employees, it would not be obliged to carry out collective consultation. When the EAT was called on to consider the point, however, it ruled in favour of the employees.

It agreed that the UK legislation was unduly restrictive and considered that it was entitled to interpret it in such a way to make it consistent with the EU Directive. It adopted the union’s suggestion that the words “at one establishment” should be disregarded, making it irrelevant, when counting to 20, where the employees were located.

The EAT’s decision went up to the Court of Appeal, who in turn referred questions to the Court of Justice of the European Union (CJEU) to determine whether, when counting to 20, employers count across their entire organisation or in individual establishments.
The Advocate General’s opinion has now been handed down. (The procedure is for the Advocate General to give an opinion before the CJEU comes to a decision on a case). His opinion is not binding but it is his view that “establishment” means the local employment unit to which workers are assigned. Further, he does not consider that the Directive requires employers to aggregate dismissals across their operation (although national laws could provide that greater level of protection, if desired and if more favourable to the workers made redundant).

It is still unclear, despite the opinion, what a ‘local employment unit’ is and the Advocate General offered the view that if an employer operates several stores in one shopping centre this could be an establishment. It is not necessary for the stores to have legal, economic, financial, administrative or technological autonomy in order to be regarded as an establishment. Ultimately, however, the meaning of a ‘local employment unit’ is going to be fact dependent and something for national courts to determine.

The CJEU may not agree with the Advocate General’s opinion, although it does so more often than not. Employers will be very much hoping that it does agree on this occasion, as a finding consistent with the opinion would significantly decrease the possible application of the collective consultation duty. However, until the CJEU reaches its decision, which will be later in 2015, the EAT’s decision remains good law. Therefore, if you find yourself in a situation where 20 or more dismissals are contemplated, we would recommend that you take advice at an early stage so that collective consultation duties can be complied with if applicable, as the consequences for failing to comply can be costly.

The Stephens Scown employment team works in partnership with organisations to improve their HR practices and advise on employment issues. To this or any other HR issue call 01392 210700 or