This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.
The well-known and controversial USDAW v Woolworths case is in the news again.
Woolworths went into administration in November 2008 resulting in store closures and large-scale redundancies. USDAW and employee representatives complained to an employment tribunal, seeking protective awards on the basis that Woolworths had breached its information and consultation obligations under section 188 of Trade Union & Labour Relations (Consolidation) Act 1992 (“TULCRA”).
At first instance HHJ McMullen upheld the claim for breach of TULRCA and made protective awards of 60 days' gross pay per affected employee. As a result of Woolworths’ insolvency, the protective awards were to be paid out of the National Insurance Fund. However, the ET found that each store was a separate "establishment" for TULRCA purposes. Consequently, the duty to inform and consult had not been engaged in respect of stores with fewer than 20 employees. The ET’s decision resulted in 3,233 redundant employees not being entitled to a protective award.
USDAW appealed to the EAT arguing that TULCRA should be interpreted purposefully requiring employers to consult where it proposes to dismiss as redundant:
- 20 or more at one or more establishments; and/or
- 20 or more employees at one establishment, with the word “establishment” being interpreted broadly and meaning the whole of the relevant retail business rather than each store; and/or
- 20 or more employees (with the words “at one establishment” being deleted from section 188 altogether).
The EAT accepted that as section 188 of TULCRA was more restrictive than the European Collective Redundancies Directive (the “Directive”) it should be read without the words “at one establishment”.
On appeal by the Secretary of State the Court of Appeal referred a number of questions to the European Court of Justice (ECJ) including:
- does the phrase in the Directive of “at least 20 dismissals” refer to dismissals across all of the employer’s establishments or the number in each establishment?; and
- if it is the latter what is meant by each establishment?
The ECJ has not yet delivered its decision but the Advocate General is of the opinion that it is the responsibility of the national court to determine the unit to which the redundant workers are assigned for the purposes of triggering the collective information and consultation obligations. In essence he concluded that the number of employees dismissed across an employer’s various establishments does not have to be aggregated.
Businesses should not rely on the Advocate General’s opinion just yet - the ECJ has been known to adopt a different approach. However, this does signal a possible return to the original interpretation of section 188.
We will provide a further update when the ECJ’s delivers is decision, which is expected later in the year. Pending a final Judgment on this issue, when considering redundancies and if there is a need to collectively inform and consult, employers may wish to continue to take the cautious approach of aggregating the number of redundant employees across its different locations.
