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.
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.