05 Feb 2015

Advocate General’s opinion on Woolworths case to be welcomed by employers

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The Advocate General's opinion on the "Woolworths" case will be cautiously welcomed by employers, as it suggests that employers will not have to carry out collective consultancy procedures in relation to redundancies across multiple establishments (unless there are 20 or more proposed redundancies at the same location within 90 days).

The cases concerned employees from Woolworths and Ethel Austin who were made redundant when the companies went into administration in 2008 and 2010 respectively, and with whom the administrators had failed to consult collectively. USDAW (the union acting on behalf of the affected employees) brought claims for protective awards for failure to carry out a collective consultation process. The Employment Tribunal denied protective awards to those employees who worked at stores with fewer than 20 workers on the basis that each store was a separate "establishment" and therefore, in accordance with their interpretation of the law, no collective consultation was required. On appeal, the Employment Appeal Tribunal (the "EAT") held that the words "at one establishment" in the relevant legislation should be ignored; therefore imposing an obligation on employers to consult wherever there were 20 or more redundancies planned across a whole company within the relevant time period. The EAT's decision meant that it would arguably be more costly and more difficult for business to restructure their workforces. It also gave rise to questions about how employers might manage collective redundancy consultation processes across different jurisdictions. In November 2014 the case was heard by the Court of Appeal and the issue of meaning of "establishment" was referred to the Court of Justice of the European Union (CJEU).

In the Advocate General's opinion (which is not binding, but which the CJEU often follow), the term "establishment" refers to the unit to which the redundant employees are assigned to carry out their duties and it is not necessary to aggregate the dismissals across all of an employer's establishments. The Advocate General added that it is for each national court to determine how the local employment unit should be defined as this will turn on the facts of each case.

We will have to wait for the final judgement from the CJEU (and for the Court of Appeal's interpretation of that judgement) for confirmation of the position - and until then the EAT decision still stands - but employers will be hoping that the CJEU will follow the Advocate General's opinion as it often seems to do.

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