Although the collapse of the UK retailer Woolworths took place nearly 7 years ago, the litigation that has followed continues to raise important legal points even now. Most notably, the ‘Woolworths’ case (or USDAW v Ethel Austin Ltd (in administration) to give it its proper name) has raised the issue of what amounts to “one establishment” for the purposes of collective consultation obligations where an employer proposes making 20 or more redundancies at one establishment within a 90-day period.
We previously reported on this case back in March (see: https://www.stephens-scown.co.uk/blog/2015/03/collective-consultation-can-you-count-to-20/), but at that time we were waiting on a decision from the Court of Justice of the European Union (CJEU) – the case having weaved its way from the Employment Tribunal, to the Employment Appeal Tribunal (EAT), to the Court of Appeal and with the Advocate General having delivered his (non-binding) opinion. The decision of the CJEU is now in.
Reversing the decision of the EAT, and bringing an end to years of uncertainty, the CJEU has held that “establishment” means the place where the workers are assigned to work, and not necessarily therefore the employer’s entire operation, as the EAT had held. In reaching that decision, the CJEU has agreed with the Advocate General’s opinion and made clear that “establishment” must be interpreted consistently across the EU.
Woolworths was in the circumstances right to consider each store as a separate “establishment” and, on that basis, not to engage in collective consultation with staff whose store had a headcount of less than 20.
Generally speaking, this will mean that collective consultation obligations will only arise where an employer is proposing to dismiss 20 or more employees in a particular office / shop / factory / site within a 90-day period. If an employer is looking to make more than 20 redundancies across its entire operation, but fewer than 20 employees in any one place, the collective consultation obligations should not arise.
Not being the only retail victim in recent years, the ‘Woolworths’ decision has now been followed by the CJEU in the case of Lyttle v Bluebird, which arises from the closure of some Bonmarché retail outlets across the UK in 2012. In this case, it has been held that a single retail store is capable of being an “establishment” for collective redundancy consultation purposes. Echoing the ‘Woolworths’ decision, the CJEU held that “it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the ‘establishment’”.
So, what’s next?
The ‘Woolworths’ case has been formally referred back to the Court of Appeal (by the CJEU), and its decision will almost certainly be to reverse the decision of the EAT and to rule in line with the CJEU. In practice, the decision in Lyttle v Bluebird perhaps makes the decision of the Court of Appeal something of a formality.
So, how does this affect employers proposing to make redundancies?
Employers will still have to assess whether they have a collective consultation duty. However, in carrying out this assessment, an employer will need to look at where its employees are assigned to carry out their duties to determine what the “establishment” may be. Even if proposing to make more than 20 redundancies within a 90-day period across its entire operation, an employer may escape collective consultation obligations if it can establish that the proposed number of redundancies within any “one establishment” (office / shop / factory / site) are fewer than 20.
As this is a technical area, we recommend you seek professional advice if you think you might come within these obligations.
The Stephens Scown employment team works in partnership with organisations to improve their HR practices and advise on employment issues. To discuss this or any other HR issue call 01392 210700 or employment@stephens-scown.co.uk