Employers are breathing a sigh of relief following the European Court of Justice (ECJ) ruling in the “Woolworths case” on the duty to consult over redundancies.
The ECJ ruled on the meaning of “establishment” in the context of redundancies consultation this week, in USDAW & Wilson v WW Realisation 1 Ltd & Ethel Austin Limited (in administration) (aka the Woolworths case) (C-80/14).
Sarah Rushton, employment partner at Moon Beever, says: “The ECJ has confirmed that it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the ‘establishment’, for the purposes of determining whether collective consultation requirements are triggered.
“It is now for the Court of Appeal to establish whether individual stores can be classified as separate ‘establishments’. If they are and fewer than 20 redundancies were made at each store, then the collective consultation requirements will not be triggered.”
Rushton said the decision took the law back to the “pre ‘Woolworths’ position” and would “come as a huge relief to employers and the government alike.
“The collective consultation requirements are incredibly unpopular with businesses and are said to run contrary to the ‘rescue’ culture when dealing with businesses that are on the verge of insolvency, because of the additional administrative and financial burdens they place on companies at the time they can least afford it. Whilst the decision is undoubtedly going to be welcomed by employers, the issue of collective consultation still remains a difficult one for businesses and one which is easy to get wrong.”
Welcoming the decision, Beverley Sunderland, managing director of Crossland Employment Solicitors, said: “Obliging employers to count redundancies across the whole company—when deciding if there are 20 or more in a 90 day period—was not only an administrative nightmare, but it also deprived employees of the opportunity to talk at local level about changes which could potentially affect them.
“What would have been helpful is more of a steer from the ECJ as to what is meant by one ‘establishment’ so employers do not inadvertently consider workplaces separately. A general steer is that if they are stand–alone workplaces, with their own accounting and management and cost centres and the employees are assigned to work there, it is likely to be a separate establishment. But it does pay to look carefully at the structure.”
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