Posted on 30.4.15
I would hazard a guess it’s not often the UK’s employers are seen saluting the European Court of Justice. But today, following the ECJ’s decision in the “Woolworths” case, even if they’re not quite saluting, employers can at least stand at ease. The few remaining trumpeters of pre-election excitement in the employment world can also stand down – the law is going back to how it was. The gist of the ECJ decision is that employers do not have to collectively consult with employees unless they propose 20 or more redundancies on a single site.
When proposing 20 or more redundancies in one establishment, employers have to consult for a minimum period of time (at least 30 days). Failure to do so leads to a punitive “protective award” of up to 90 days’ gross pay per affected employee. It is therefore important for employers to understand their obligations and what an “establishment” actually is. It was long understood that an establishment would (in general) mean an individual site, albeit there were exceptions.
The Employment Appeal Tribunal threw that into confusion in 2013 when they held that “establishment” could broadly mean the whole of a retail operation, not just an individual store. It’s easy to see that a large organisation having to collectively consult every time they proposed 20 redundancies across the whole of its operation would be logistically onerous to say the least. And despite the EAT decision, the Department for Business, Innovation and Skills (BIS) maintained in its guidance that they considered establishment to have its pre-EAT meaning, i.e. business as usual. But what were we supposed to advise clients in the meantime? Fortunately, the Court of Appeal referred the case to the ECJ and from the fog we finally have some clarity. We can all go back to where we were.