The "Woolworths" case: Decision of the Court of Justice for the European Union (CJEU) - DAC Beachcroft

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The "Woolworths" case: Decision of the Court of Justice for the European Union (CJEU)

Published On: 30 April 2015

Today we have had the long awaited decision of the Court of Justice for the European Union (CJEU) in respect of the case of USDAW v Ethel Austin Ltd (in administration); USDAW and anor etc - the well-known "Woolworths" case. 

In short, the decision is good news for employers as the CJEU has decided that it is the entity to which the employee is assigned to carry out his/her duties that constitutes the "establishment" for collective consultation purposes. 

What happened?

By way of reminder, this case sent shockwaves through the legal and HR professions when it was decided by the Employment Appeal Tribunal (EAT) in 2013, that the words “at one establishment” are to be disregarded for the purposes of any collective redundancy involving 20 or more employees. 

In the Woolworths case, the employer said that collective consultation is triggered when 20 or more employees are at risk of redundancy in any single establishment operated by it, e.g. a particular store. The employees said that the 20 employee trigger relates to the total number of at risk employees in all of the employer's establishments, i.e. the whole business. 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.

This case was appealed to the Court of Appeal in January 2014. However, before making a decision on the substance of the appeal, the Court decided to refer a point to the CJEU on the interpretation of the European Directive which governs this area.

What has been decided?

On 5 February 2015, the Advocate General's delivered its opinion in this case (which is the pre-cursor to the final CJEU judgment) and said that the "establishment" is the unit to which employees are assigned, which means that "establishment" does not have to be the whole business.

On 30 April 2015, the CJEU confirmed that it agrees with the Advocate General, and has stated that where an organisation comprises several units, it is the entity to which the employees are assigned to carry out their duties that constitutes the "establishment".

It has said that the words "at least 20" means the dismissals affected in each separate establishment. Therefore the EAT was wrong to add all of the establishments together.

The CJEU has formally referred the case back to the Court of Appeal, and the Court of Appeal's decision is likely to be a mere formality of overturning the EAT's decision.

What does this mean for employers?

This is good news for multi-site employers who have faced uncertainty for some time as to their redundancy obligations.

Following the EAT decision, some organisations chose to adopt the "one establishment" approach, which, whilst safe, extended the duration of redundancy exercises, increased salary costs and arguably caused uncertainty for those affected. This often conflicted with the fact that there are often different reasons for redundancies; e.g. one location may be closing due to a property sale, whereas another is closing due to a loss of a contract.

Organisations can now breathe a sigh of relief that they can treat separate units, functions or sites as establishments in their own right. However, this is of course subject to the need to assess what an establishment is as, for example, a number of small sites can be classed as "one establishment". Indeed the CJEU has said that the Court of Appeal will need to make this assessment in respect of the Woolworths stores and test whether they can be classed as separate establishments. The CJEU decision itself does not say anything new about what can be classed as one establishment, but we can help organisations with that important assessment.

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