30 April 2015

ECJ ruling on collective redundancy consultation

The European Court of Justice (ECJ) has today confirmed in the 'Woolworths' case that, when counting the number of redundant employees across multiple sites for the purposes of collective redundancy consultation, each of the employer's establishments (in this case shops) must be looked at separately. The effect of the ruling is that only employees in the larger shops were entitled to be consulted collectively. Hence the ECJ has confirmed that it is not necessary to amalgamate redundancy numbers across all the employer's establishments (which would mean that the 20 employee threshold was much more easily reached and that collective consultation would be required in far more cases).

Following our report on the opinion of the Advocate General in the ECJ in the case (USDAW and anor v WW Realisation 1 Ltd (in liquidation) in February, the ECJ has, as we expected, followed the Advocate General's opinion in reaching its decision.

The ECJ also confirmed that 'establishment' means the part of the undertaking or business to which the employee is assigned to carry out his or her duties. It is not necessary, for 'an establishment' to include managers who can independently decide whether or not to make redundancies, or for it to have any kind of autonomy, economic, administrative or otherwise. Often an establishment will be part of an undertaking (as in the Woolworths case) or the establishment and the undertaking may be one and the same, as in a business that operates out of only one location.


Although not a surprising decision, this is one that will be welcomed by employers making large scale redundancies or business closures where there are many smaller business units or establishments to which employees are assigned. The Court of Appeal will now have to consider whether the employment tribunal that originally heard the claims approached the 'establishment' question correctly and may shed further light on how 'establishment' should be defined in a UK context.

The ECJ's reasoning, which is based on the wording of the Directive and the need to create a consistent system of collective redundancy consultation across the member states of the EU, is persuasive. But regardless of whether the decision is academically rigorous, it creates an inconsistent and unfair system in practice. When a company, like Woolworths, makes a central decision to close shops, why should the entitlement of staff to be collectively consulted depend on whether they work in a big store or a little one? Whether they ought to be consulted collectively is a political question but surely, whatever the decision, all of the employees ought to be treated consistently.


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