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Collective redundancies - what's the latest?

The case of Usdaw & Wilson v Woolworths and others known as the Woolworths case has been in the news over the last year and you may be wondering what’s the big deal? This is not the only case to raise the question of the meaning of “establishment” when considering collective redundancies but why is the meaning so important?

In all of the UK cases, the claimants were shop workers where collectively there were less than 20 employees or they were members of the trade union, USDAW which represented employees of such stores. If an “establishment” has fewer than 20 employees there is no need to conduct collective consultation when carrying out a redundancy exercise. This also means that those employees cannot claim a protective award. If the test to be applied is whether the whole employer (who has more than one branch) is an establishment regardless of where the employees work, then in the event of a breach of the requirment to undergo collective consultation, those employees could claim a protective award.

The question has been referred to the European Court of Justice (ECJ) for determination but whilst we await the decision of the ECJ, the Attorney General has provided his view on the application of the law. Whilst this opinion is not binding on the ECJ, it is commonly accepted and followed. The Attorney General has confirmed that establishment means “the unit to which the workers made redundant are assigned and carry out their duties”. This means the shop at which they work.

The claimants have argued that where an employer is seeking to make more than 20 redundancies in a 90 day period, the entire employer regardless of where the employees work should be regarded as the “establishment”. The issue is that where redundancies occur as a result of insolvency, the secretary of state picks up the tab. If the claimants are right then all employees would be eligible for a protective award regardless of the size of the store at which they worked.  

The Attorney General has chosen his means of interpretation but has stated that it is a matter for domestic courts to determine in any given situation. He cited that where an employer operates several stores in one shopping centre, that may be a situation where it is considered that it forms a single local employment unit. The decision will be based on a number of factors.

We await the judgment of the ECJ. However, this is not likely to be before the summer so for now we watch and we wait. We will of course keep you posted on our blog.



Posted in: Employment, News

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