LANDMARK EAT JUDGMENT DRAMATICALLY CHANGES PROCESS FOR CROSS-SITE REDUNDANCIES

05 July 2013

The Employment Appeal Tribunal (EAT) has issued its decision in USDAW v Woolworths. This decision will dramatically change how employers carry out cross-site redundancies, confirming that—subject to any appeal or new legislation—employers must collectively consult when 20 or more employees are proposed to be dismissed by reason of redundancy within a period of 90 days or less, regardless of where the employees are located.

In the UK, employers have a general duty to consult with employees individually before deciding to terminate their employment on the grounds of redundancy. In addition, employers have the duty to collectively consult with either trade union representatives or elected employee representatives if the employer wishes to dismiss a certain number of employees. This is set out in section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), which states that the obligation to collectively consult is triggered by an employer proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

The duty to collectively consult comes from a European directive. The directive in question—Council Directive 98/59/EC (the Directive)—sets out that the duty to collectively consult is triggered when the number of redundancies is "over a period of 90 days, at least 20 [dismissals on the grounds of redundancy] . . . in the establishments in question."

Crucially, there is a difference between the Directive and TULRCA, as the Directive refers to 20 dismissals in the "establishments in question", whereas TULRCA refers to 20 dismissals "at one establishment".

When Woolworths went into administration in November 2008 and ceased to trade in January 2009, employees were dismissed by the administrators without consultation. The Union of Shop, Distributive and Allied Workers (USDAW) brought claims on behalf of the employees, stating that they were entitled to the protective award.

The Employment Tribunal ordered that the majority of employees should receive 60 days' pay by way of protective award but found that 3,233 employees were not due the award. The reason for this was that some employees were employed in stores that had fewer than 20 employees, and, according to commonly accepted practice, the tribunal held that each store was a separate establishment and as such, the duty to collectively consult was not triggered at these stores.

USDAW appealed the decision to the EAT on the basis that the "one establishment" test adopted by the Employment Tribunal was inconsistent with the Directive.

The EAT held that there should be some interpretation of TULRCA to yield the outcome that the obligation to collectively consult arises when 20 or more employees are to be dismissed—irrespective of their location.

Subject to any appeal or new legislation, the requirement for collective redundancy consultation will be triggered in the future when an employer proposes to make redundant 20 or more employees within a 90-day period, even if they are employed across multiple establishments. It will not be open to the employer to avoid collective consultation by ensuring that fewer than 20 employees are made redundant at a number of different locations.

 

View the decision here.