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Collective Redundancy Consultation - Change to Law

22 June 2015

The ECJ’s recent  decision in the case of USDAW v WW Realisation (known as the “Woolworths” case) on the scope of “establishment” for collective redundancy consultation purposes will be welcomed by employers.  Collective redundancy consultation requirements are triggered when 20 or more employees are to be made redundant at one “establishment” within a 90 day period.  The ECJ has confirmed that “establishment” in this context is the entity to which the workers made redundant are assigned to carry out their duties, rather than the employer’s business as a whole.  The Woolworths case has already been followed by the ECJ in Lyttle v Bluebird so it may be that the issue as to how to define an establishment is now settled.  This will clearly result in less collective consultation exercises being triggered, which will allow businesses more flexibility in managing their workforce.

The case however will still need to return to the Court of Appeal to apply the judgement in the UK. Since the decision appears to allow for the current UK legislation to stand, it is likely that it will be fairly straightforward for the Court of Appeal to apply. This will result in the earlier Employment Appeal Tribunal decision, which found that the broader interpretation should apply, being overturned. Increasingly this  EAT decision now looks like a rogue decision.

While this is positive news for employers, they should still carefully consider their collective consultation obligations in all redundancy situations.  “Establishment” is said to mean the business unit to which employees are assigned, but employees and unions will still be keen to argue that the relevant “establishment” is larger than just the individual premises at which employees work.  Employers will wish to show that individual premises can be an establishment because that is the business unit to which employees are assigned, and it is not essential for employers to show that there is management presence at the premises who can independently effect redundancies. As ever these cases are fact specific but the upshot of the Woolworths and Lyttle cases is that employers will find it easier to make their arguments that the “establishment” is the site where  the employees work rather than the business as a whole.

This article was written by Nick Hurley. For more information please contact Nick on +44 (0)20 7203 5039 or nick.hurley@crsblaw.com