The Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) states that collective consultation obligations apply where an employer is proposing to dismiss as redundant 20 or more employees 'at one establishment' (Section 188).

This provision implements the EU Collective Redundancies Directive. However, the Directive applies even where employees are employed at different establishments, so the words 'at one establishment' in TULRCA are incompatible with that Directive. The EAT has recently considered this discrepancy when it had to decide whether the duty to inform and consult was triggered in relation to former Woolworths' staff who worked at stores with fewer than 20 employees.

In order to limit their obligation to consult on a collective basis, the administrators of Woolworths argued that each store was a separate establishment. This argument was successful in the Employment Tribunal, which meant that 3,233 employees (out of a total workforce of 4,400) were not entitled to a protective award because they were employed at stores with fewer than 20 employees. On the other hand, employees who worked at the larger stores with 20 or more employees received a protective award. USDAW challenged this decision on the basis that limiting the definition of establishment in this way is contrary to EU law.

The EAT agreed with the union's challenge and overturned the Tribunal's decision. It ruled that, because of its obligation to apply the relevant EU law, the words 'at one establishment' should be deleted from Section 188 of TULRCA. This means that collective consultation will be required whenever an employer proposes to make 20 or more employees redundant, regardless of where those employees are located or how the workforce is organised.

Since Woolworths is insolvent, the EAT's judgment means that protective awards of up to 90 days' gross pay could be payable by the Secretary of State to all affected Woolworths employees. The Government has applied for permission to appeal the EAT's decision. For now, it is vital that employers review any redundancy exercise they are contemplating or currently carrying out in order to ensure compliance with the revised TULRCA wording. As this case shows, failing to comply with the requirement to inform and consult on a collective redundancy can be extremely costly.

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