Collective redundancy consultation: Woolworths case referred to the European Court - January 2014 - DAC Beachcroft

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Collective redundancy consultation: Woolworths case referred to the European Court - January 2014

Published On: 23 January 2014

Last summer the Employment Appeal Tribunal (EAT) decision in USDAW v Ethel Austin Ltd (in administration); USDAW and anor etc - the Woolworths case - sent shockwaves through the legal and HR professions when it decided that the words “at one establishment” are to be disregarded for the purposes of any collective redundancy involving 20 or more employees.

This case was appealed to the Court of Appeal who heard it yesterday. However, before making a decision on the substance of the appeal, the Court has decided to refer a point to the Court of Justice for the European Union (CJEU) on the interpretation of the European Directive which governs this area.

The issue in the Woolworths case was when the duty to collectively consult was triggered. The employer said that it is triggered when 20 employees are at risk of redundancy in any single establishment operated by it. The employees said that the 20 employee trigger relates to the total number of at-risk employees in all the employer's establishments. The EAT agreed with the employees that the correct test was whether the 20 employee total was triggered by the cumulative total of all the establishments. 

Click here to see our previous alert for more detail.

What does this mean for employers?

Although not unexpected, this decision does mean the law relating to collective consultation is going to be in a state of flux for some time to come (referrals to the CJEU can take around a year) and therefore employers are going to have to continue to operate in this state of uncertainty. The EAT decision stands unless and until it is overturned by the Court of Appeal. Failure to comply with the test laid down by the EAT decision may mean that employers start to consult too late or not at all, risking substantial protective awards. Claims for a protective award, brought in reliance on the EAT decision, may be stayed, pending the outcome of the case in the Court of Appeal. Since the EAT judgment came out last June we have been assisting employers to assess their risk and advising on the possible approaches to manage that risk.

Some practical tips for employers consider:

  • Ensure that your local HR teams are communicating with each other and that procedures are in place to capture all proposed redundancies across all locations;
  • Keep a central record of all affected employees in relation to proposed redundancies nationwide;
  • Consider whether there are employee representatives currently in place whose responsibilities could be extended to cover collective consultation. This would need to be done in accordance with the internal procedures in place for electing local employee representatives.