USDAW and others v WW Realisation 1 Ltd (in Liquidation) and another

This ground-breaking EAT decision redefines the meaning of a local establishment, and renders previous case law on this point irrelevant.

In this case, claims for protective awards were brought by a trade union on behalf of former staff at Woolworths who were made redundant after the chain closed its stores at the end of 2008. An employment tribunal found that each store was a separate 'establishment'. As a result, the duty to consult collectively was not engaged in respect of stores with fewer than 20 employees, due to an exemption within the legislation. This then meant that employees at those stores could not benefit from a protective award even though they had been treated the same as those employees with more than 20 employees in their store. The union appealed to the EAT.

The EAT found in favour of the trade union representing the former employees of Woolworths. The EAT overturned the tribunal’s decision that each store was a separate establishment. The EAT ruled “that the words ‘at one establishment’ should be deleted from section 188 as a matter of construction…”

It is notable that the EAT has said that the words “at one establishment” should be excised altogether from domestic legislation rather than limiting the judgment to the facts of this particular case. Subject to any further appeal, this case would bring about a significant change to the current law on collective consultation.

The focus going forward will be on the totality of the employer’s operations, rather than their geographical location. If 20 or more dismissals are proposed across all such operations the EAT considers that the collective dismissal requirements apply, even if the locations may be operationally and geographically distinct.

It may be that this change to the law will have a greater impact on the public sector, as opposed to the private sector, as many public sector organisations have multiple establishments e.g. schools, leisure centres, offices. Given that more redundancies are likely as austerity measures continue to bite, employers that had previously relied on the fact that they had distinct establishments to avoid triggering collective consultation obligations, when making 20 or more employees redundant, will no longer be able to do so. Employers should also consider revising any policies relating to collective consultation to take account of this decision.

If you are about to embark on or are involved in a collective consultation process covering 2 or more locations where more than 20 people are involved over a 90 day period, we recommend that you speak to us.