European Union: Woolworths Case - Encouraging News For Multi-Site Employers

Last Updated: 18 February 2015
Article by Nick Dent and Annette Ryan

Multi-site employers will welcome the opinion of the Advocate General of the European Court of Justice (ECJ) last week in the high profile "Woolworths"1 case. In 2013, the UK Employment Appeal Tribunal (EAT) in this case decided that all redundant employees of multi-site employer Woolworths were entitled to a protective award for failure to inform and consult them about their dismissals.

The basis for this decision was that the EAT considered that the law should require an employer to aggregate the number of redundancy dismissals across all sites within a company for the purpose of determining whether the 20 employee threshold for informing and consulting employees is met.

The Advocate General, however, does not agree. He says that under the European Directive, an employer is not required to aggregate the number of redundancy dismissals in all establishments for the purpose of determining whether the applicable thresholds are met. If this is correct, multi-site employers will only need to count employees to be dismissed in each "establishment" of the company to determine whether the 20 employee threshold is met to trigger the obligation to inform and consult.

Background to the opinion

Following the mass redundancies that took place after the insolvency of both Woolworths and the clothing retailer Ethel Austin, USDAW, the shop workers union, brought a number of claims against the employers for a protective award for failure to consult employee representatives about those redundancies.

The law as it is currently set out in the UK statute book provides that only an employer who is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less must consult employee representatives. Based on this legislation, the Employment Tribunal found that each Woolworths store was  a separate "establishment", so that the obligation to consult collectively only arose at all in the larger stores where 20 or more employees were made redundant (a view now shared by the Advocate General).

USDAW appealed to the Employment Appeal Tribunal and it was decided in July 2013 that the words "at one establishment" should effectively be ignored because the UK statute was an improper implementation of the underlying European Directive. This meant that the number of redundancies required to trigger a collective consultation obligation  needed to be looked at on a crosscompany basis rather than on a  per-establishment basis, which in turn meant that each Woolworths and Ethel Austin employee was entitled to a protective award, irrespective of the size of the store in which they worked.

The obligation to pay these awards fell on the Secretary of State, who appealed this decision to the Court of Appeal.

In January 2014, the Court of Appeal referred a number of questions to the ECJ, including a question regarding the exact scope of the concept of "establishment" and whether it should be construed to mean the whole of the relevant business, part of the business contemplating making redundancies, or the unit to which a worker is assigned their duties.

The Advocate General's considers that the concept of "establishment" must be construed in the same way in relation to both options under the European Directive, that being the local employment unit where workers are assigned to carry out their duties. In reaching this view, the Advocate General considered the socio-economic effects of mass redundancies, and specifically, the effect they have on local communities.

It is therefore the Advocate General's view that an employer is not required to aggregate the number of redundancy dismissals in all establishments for the purpose of determining whether the applicable thresholds are met.

What the Advocate General's opinion means for employers contemplating redundancies

The opinion is a welcome relief for employers who have been living with the EAT's decision since 2013. This has meant having to keep tabs on all nondiscipline related dismissals across all their sites when calculating whether they hit the 20 person threshold. This has proved to be a huge administrative burden, particularly for large employers who would have had constant consultation obligations.

Although the opinion of the Advocate General is not binding on the ECJ, it indicates the likely path that the ECJ will take and provides employers with a greater degree of certainty that they will likely be able to soon return to their pre-July 2013 consultation practices. Whilst some employers have been quietly ignoring the "Woolworths case" and have been continuing to consult in the usual fashion while they waited for the results of the ECJ, it is likely that more will now follow suit without much objection. However, a prudent employer may want to take a cautious approach and continue to aggregate the number of redundancies across different locations whilst waiting for the decision of the ECJ which is expected later this year.



The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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