Collective Redundancy Consultation – An End To Uncertainty

Some recent decisions of the European Court of Justice (ECJ) have put an end to the long standing uncertainty, and administrative burden, placed on employers since the ground breaking decision of the Employment Appeal Tribunal (EAT) in the "Woolworths" litigation on the collective redundancy legislation.

The latest of these ECJ decisions was announced last week and concerned the fall-out from the insolvency of the women's retailer Bonmarché in 2012, and in particular, the closure of 12 of its 20 stores in Northern Ireland. The ECJ's decision echoed the decision in the better known "Woolworths" litigation, also decided this month. The "Woolworths" litigation actually relates to two separate insolvencies - the famous closure of the beloved Woolworths stores in 2008 and, two years later, the clothes retailer Ethel Austin which succumbed to the same fate. In both Woolworths and Ethel Austin, the shop workers union USDAW made claims for a protective award for failure to consult employee representatives about the redundancies which followed.

Both ECJ decisions confirmed that employers do not have to aggregate the number of redundancies across all their sites when determining whether the 20 employee threshold for informing and consulting employees is met. These decisions are a welcome relief for multi-site employers, who have been living with uncertainty on collective consultation during a redundancy process since the EAT's decision in 2013.

The background to the ECJ's decision in the Woolworths litigation

The UK legislation says that employers must consult employee representatives if they are proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. The issue to be decided in the "Woolworths case" was whether each store was a separate "establishment", so that there was only an obligation to consult collectively in the larger stores where 20 or more employees were made redundant.

It came as a surprise when in 2013 the EAT disagreed with the Employment Tribunal's decision that each store was a separate "establishment", concluding that UK law should require employers to aggregate the number of redundancy dismissals across all sites when determining whether the 20 employee threshold is met. In order to make the UK law consistent with the Directive, the EAT decided that the words "at one establishment" should effectively be ignored. The practical impact of this decision was ground breaking - as...