Financial & Legal News

NSIGHT: Collective Redundancy – Does “ESTABLISHMENT” Mean “ESTABLISHMENT”

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We received last month the Advocate General’s opinion in the long running Woolworths dispute on the meaning of “establishment” in collective redundancy.  The European Court of Justice will deliver its Judgment later in 2015 on the Woolworths’ case. 

The Employment Appeal Tribunal had held that “establishment” effectively means “legal entity”, meaning that employers with various sites were required to add together all dismissals in the company, irrespective of location when considering whether the requirement for collective consultation in a redundancy situation had been triggered.  The Attorney General’s decision is the more traditional and employer friendly approach which means that “establishment” means the “local employment site to which the employees are assigned”. 

This case arose because when shop workers were made redundant when Woolworths PLC and Ethel Austin went into liquidation and the stores where they worked closed down, the liquidator only consulted at stores which had 20 or more employees.  The Trade Union issued claims arguing that if there were more than 20 people across the business unit who were to be made redundant, then all employees should have been consulted with.  The ET and the EAT both agreed with the Trade Union.  The Secretary of State appealed to the Court of Appeal which, amongst other things, asked the European Court of Justice to consider two key questions:-

  • Whether the phrase “at least 20” in the directive means the number of dismissals across all establishments together, or on an individual establishment – by – establishment basis?

  • If it refers to each individual establishment, what does “establishment” mean?Is it the whole of the relevant retail business (being a single economic business unit), the part of the business making redundancies, or the unit where the employee is assigned, for example, in this case an individual store?

The Attorney General’s view was that there was no requirement under EU law to add together the number of dismissals across all establishments in a legal entity but that it would be for the National Court or Tribunal to decide whether a local employment unit was an establishment and an individual store may well be a separate establishment.

So What Should Employers Do Until We Receive The Decision Of The ECJ Some Time This Year? 

My advice is that it would be prudent to add together all redundancies across the company when deciding if it is necessary to consult at least until the ECJ decision is received and then potentially until the issue is reconsidered by the English Courts. 

If you have any queries on collective redundancies or require any other employment law advice, please do not hesitate to contact Susan Mayall susan.mayall@pearsonlegal.co.uk,  Michael Pitt michael.pitt@pearsonlegal.co.uk,  or Andrew Murray andrew.murray@pearsonlegal.co.uk.

Also in this issue of Insight

 

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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