“Establishment” and collective redundancy consultation – USDAW and Woolworths

by Laurie Anstis on June 1, 2013

Section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 provides that:

“Where an employer is proposing to dismiss as redundant 20 or more employers at one establishment within a period of 90 days or less, the employer shall consult about the dismissals … appropriate representatives of … the employees …”

This provision derives from article 1(a) of the European Union’s Collective Redundancies Directive, which gives national governments the opportunity to define collective redundancies in one of two alternative ways – where the number of redundancies is:

“(i) either, over a period of 30 days:

at least 10 in establishments normally employing more than 20 and less than 100 workers, 

at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers,

at least 30 in establishments normally employing 300 workers or more

(ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed at the establishments in question.”

A comparison of section 188 and article 1 show that the UK government has adopted a hybrid approach – 20 redundancies per establishment over 90 days. This looks like article 1(a)(ii), but article 1(a)(ii) has no reference to the redundancies being per establishment – it is simply an overall number of redundancies.

As long ago as 2002 (in MSF v Refuge Assurance), the EAT acknowledged that this hybrid approach was not permitted by the directive, which required a choice of either article 1(a)(i) or 1(a)(ii), and did not allow a bit of both to be used. However, in that case, Lindsay J found that the difference between the UK statute and the directive was “irremediable by construction” – in other words, the UK courts were stuck with the wording of the UK statute and could not vary it in order to make it consistent with the directive.

The issue arose again after the insolvency of Woolworths. The employees of Woolworths lost their jobs and the question was whether there needed to be collective consultation. At first instance, the employment tribunal followed the orthodox view that each individual shop counted as an “establishment”, so that collective redundancy consultation was required for those who worked at the larger shops which employed 20 or more people, but not at the smaller shops which employed fewer than 20 people. If article 1(a)(ii) had been followed, then there should have been collective consultation with all employees, regardless of the number employed at any individual store.

The employment tribunal decision was appealed, and the Employment Appeal Tribunal heard the appeal last Thursday.

There is, as yet, no written judgment from the Employment Appeal Tribunal, but a press release from the Claimant’s lawyers, Slater & Gordon says that:

“the Appeal Tribunal … ruled that the words “at one establishment” are here and after to be disregarded for the purposes of any collective redundancy involving more than 20 employees, meaning that once it is proposed that more than 20 employees in a single business are to be made redundant, their location becomes irrelevant.”

We won’t know the full position until a written judgment is available, which may not be for some weeks, but this press release suggests that the EAT has decided first that section 188 is incompatible with the EU directive, and second, that the words “at one establishment” can and should be removed from section 188 by employment tribunals in order to render the UK legislation compatible with the EU directive.

If the written judgment shows that this is the case, then it would be a significant revision to the current rules on collective redundancy consultation.

[Update 1 July 2013 – the full judgment has now been published.]