The 'Woolworths' Case - February 2015
Published 5 February 2015
With constant pressure on budgets and funding, large scale re-organisations and redundancies remain ever present in the news. Since summer 2013, multi-site providers have had to grapple with the decision by the Employment Appeal Tribunal (EAT) in USDAW v Ethel Austin Ltd (in administration); USDAW and anor etc - the Woolworths case - which 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.
In the Woolworths case, the employer said that collective consultation is triggered when 20 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 employer's operation as a whole. 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 Court of Justice for the European Union (CJEU) on the interpretation of the European Directive which governs this area.
Today (5 February 2015) we have received the Advocate General's opinion in this case. This is a pre-cursor to the final decision of the CJEU.
What has been decided?
Firstly, the Advocate General's opinion is not a legally binding decision, but will be taken into consideration by the CJEU and can be a useful indicator of what the final judgment will be.
The Advocate General has said that the "establishment" is the unit to which employees are assigned, which means that "establishment" does not have to be the whole operation.
It has, however, said that it remains open to Member States to introduce provisions, which are more favourable to employees.
What does this mean for employers?
Although this is largely a welcome decision for employers, today's opinion does mean the law relating to collective consultation has not yet been finally determined. Employers still face some uncertainty as to redundancy obligations until there is a final ruling. However many providers have already been adopting the "one establishment" approach post the EAT decision, which, whilst safe, has extended the duration of redundancy exercises, increased salary costs and arguably has caused uncertainty for those affected.
Employers have also had to grapple with the fact that there are often different reasons for redundancies within its operations, e.g. one location may be closing down, whereas another is undergoing a major restructure. Pulling together various different threads of consultation into one exercise has proved troublesome for some employers, as has being in a perpetual state of consultation due to having to aggregate individual redundancies together. Subject to the CJEU's decision, employers may be able to pave a way back to the pre-Woolworths position.
However, in light of this issue, we may see some political will in the run up to the election to address the issue of collective redundancies, particularly if it is considered that the legal obligation to collectively consult has a negative impact on a struggling business, or that the determination of what an "establishment" is causes a disadvantage for some employees in a large scale redundancy exercise.
We have been advising many multi-site employers on this issue for some time. Some top tips are:
- 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 across all locations;
- Continue to engage with staff side/union representatives in connection with major redundancies/restructures.
For more information
Please contact Simon Lambert, Employment and Pensions Group Partner.
Tel: +44(0)117 918 2085