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The Woolworths question finally laid to rest

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23/06/2015

The Court of Justice of the European Union (CJEU) has ruled that the words, ‘one establishment’ in section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) refer to the separate workplace to which the individual is assigned rather than the entire business. In doing so, the CJEU has followed the Advocate General’s opinion issued earlier this year and provided employers with welcome clarification on how to determine when the threshold for collective redundancy consultation is met. The CJEU has also confirmed, in a separate case, that the same interpretation applies in Northern Ireland.

The effect of the CJEU decision in Woolworths is to return the rules on collective redundancy to the ‘status quo’ that existed before the controversial decision of the Employment Appeal Tribunal (EAT) in 2013 that saw many employers having to aggregate proposed redundancy numbers across their entire business rather than at the affected site only.

Shortly after the CJEU decision in Woolworths was reported, the CJEU gave its decision in a separate but related Northern Ireland Industrial Tribunal case (Lyttle v Bluebird). This case dealt with the same question on the meaning of ‘one establishment’ (albeit under Northern Ireland’s collective consultation legislation). The CJEU took the same approach to the definition of establishment as in ‘Woolworths’. This is clearly good news for those employers with operations across the entire UK including Northern Ireland and means that a consistent approach can be adopted across the board.

How does this affect employers?

  • Employers who have continued during this period of uncertainty to adopt the ‘pre-Woolworths’ approach to collective consultation (as many did) are now able to do so in the knowledge that exposure to claims is far reduced. Any financial provision for risk of claims can be re-assessed and probably reduced.
  • Those employers who have been under pressure from Unions or employee bodies to change their collective redundancy processes in light of the EAT decision will be able to rely on the CJEU ruling to draw a line under any ongoing discussions.
  • Employers who followed the EAT’s decision and, consequently, aggregated redundancy numbers across sites can adopt the ‘pre-Woolworths’ approach in relation to future exercises. This will be welcome news to many HR teams who had been struggling with the sheer and unwieldy logistics of co-ordinating and calculating redundancy numbers across an entire UK business.
  • Employers who are part way through a collective redundancy exercise and have calculated the threshold for collective consultation based on the EAT decision should consider how best to proceed in view of the CJEU’s ruling. Employers should be wary of simply ‘reversing’ out of ongoing collective redundancy procedures without first taking advice on the potential risks involved. A risk/benefit analysis will be required that takes into account not only the legal risks but also considers the industrial relations/PR issues.
  • As was the case before the EAT’s decision, it is still important to assess whether ‘one establishment’ incorporates a single site or a number of sites which are local to each other or which have related functions. If, for example, a retailer has a number of units in a shopping centre then it is possible that, by virtue of their proximity or other connecting factors, the units could be classed as one establishment for the purposes of TULR(C)A. If in doubt, employers should always seek advice on this point.

For further information on the background to this case please see our recent update Employers breathe a collective sigh of relief as the Woolworths case is decided.

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