Woolworths’ Case Update: Has collective redundancy consultation just got easier for multi-site organisations?

7 April, 2015
by: Cripps

Woolworths was one of the first major casualties of the credit crunch and its demise made the headlines for many reasons.

 

One such reason was the controversial ruling by the Employment Appeal Tribunal (“EAT”) in the case of USDAW v WW Realisation 1 Ltd, commonly referred to as the ‘Woolworths case’, which concerned the trigger point for collective redundancy consultation and caused quite a stir amongst employment law and HR practitioners. However, an opinion delivered by the European Court of Justice’s (“ECJ”) Advocate General in February 2015 has gone some way to put those practitioners at ease.

 

Background

Section 188 of Trade Union & Labour Relations (Consolidation) Act 1992 (“TULCA”) says that where an employer is proposing to dismiss as redundant 20 or more employees at one establishment they are obliged to inform and collectively consult. In practice, what this often meant is that multi-site organisations, like Woolworths, would treat each of its stores as one establishment and only collectively consult if proposing to dismiss 20 or more people at each individual store.

 

It has long been recognised that by including the words “at one establishment”, TULCRA was incompatible with the EU law from which it derives. Nonetheless, the UK courts had always been reluctant to rectify this discrepancy – until the decision of the EAT in the Woolworths case.

 

EAT’s decision

What the EAT ruled was that the words “at one establishment” should be disregarded for the purposes of any collective redundancy involving 20 or more people.

 

The knock-on effect of this decision meant that the duty to collectively consult would arise more often. By way of example, if an employer was making 8 people redundant at its Southampton office and 13 people redundant at its Newcastle office, it would be required to collectively consult.

 

The increased burden placed on employers by the EAT’s decision was easy to see. Collective consultation introduces delays of 30 and 45 days to any redundancy exercise and takes up significant management time.

 

The EAT’s decision also threatened hundreds of compensation claims – none more apparent than in the Woolworths case where 3,500 former employees were now seeking financial compensation on the basis that they had not been consulted with properly.

 

Advocate General’s opinion

Following a number of combined appeals, the EAT’s decision eventually reached the ECJ whereby Advocate General, Nils Wahl, concluded that the number of employees dismissed across an employer’s various establishments does not have to be aggregated and that EU law does not require UK law to be changed.

 

What next?

The Advocate General’s opinion has been welcomed by employers and employment law practitioners alike – however, the opinion is not binding and the ECJ could yet decide that it prefers the EAT’s approach. That said, a change of tack in this regard is unusual. Employers should nonetheless exercise caution until the ECJ delivers its decision, which is expected later this year.