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17-02-2015

The Trade Union And Labour Relations (Consolidation) Act 1992 (TULRCA) provides that an employer must collectively consult where it proposes to dismiss as redundant 20 or more employees at a single establishment. If it fails to do so each employee may be entitled to a protective award of up to 90 days gross pay. This limitation meant that often collective consultation requirements were not triggered where (for example) a business had a chain of shops, and less than 20 employees were made redundant in each shop.

In USDAW v Ethel Austin Limited (in administration) (aka the ”Woolworths case”), the Employment Appeal Tribunal (EAT) ruled that TULRCA was inconsistent with the EU directive and the limitation of ‘single establishment’ should be disregarded. This meant that when looking at collective consultation requirements, the whole business needs to be looked at not just the individual locations where the employees were based. The consequence of this decision was a protective award to hundreds of redundant employees estimated to have cost in excess of £4 million and huge criticism levelled at the Liquidators, who failed to ensure proper consultation took place.

The Liquidators for the Woolworths and Ethel Austin retail chains, with the UK government intervening, appealed the decision; and the 'establishment' question has now been referred to the Court of Justice of the European Union (CJEU) as part of that appeal.

The Advocate General (AG) has now given a long-awaited opinion on the matter and has stated that an ‘establishment’ – for the purposes of working out if collective consultation requirements are triggered – is the unit to which the redundant employees were assigned to carry out their duties. This is a matter for the national courts to decide based on the facts. At first blush it looks like the pre- “ Woolworths” position may prevail and that the EAT was wrong. However, the AG did not rule out the possibility that, on the facts, several shops within one shopping centre could still be viewed as a single unit. The opinion of the AG is non-binding, but the European Court of Justice generally follows it. For the moment, however, employers are in an unhappy state of limbo.

TESTIMONIALS

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