The ECJ has today handed down its judgment in the Woolworths case, clarifying the term 'establishment' for the purposes of the collective consultation obligations when dealing with large scale redundancies. For a detailed background to the litigation, please see our previous blog posts: Woolworths: judgement on collective redundancy consultation expected and Advocate General’s Opinion on collective redundancy consultation published.
In the present case, the request for a preliminary ruling from the ECJ posed two significant questions:
1) Whether the expression of 'at least 20' in the Directive refers to the number of dismissals across all of the employer's establishments in which dismissals are effected within a 90-day period, or only the number of dismissals in each individual establishment;
2) To clarify the meaning of the term 'establishment' and to explain whether it covers the whole of the relevant business (regarded as a single economic business unit) rather than the unit to which the workers concerned are assigned to carry out their duties (ie each individual store);
In today's decision, in relation to the first question, the Court finds that the words 'at least 20' should be interpreted as meaning the number of dismissals effected in each establishment considered separately rather than the business as a whole.
The Court has also confirmed that where an undertaking comprises several entities, it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the 'establishment' – ie their individual workplace (this follows previous EU case law).
The Court concluded that the EU Directive must be interpreted as not precluding national legislation that lays down an obligation to inform and consult workers in the event of the dismissal, within a period of 90 days, of at least 20 workers from a particular establishment of an undertaking, and not where the aggregate number of dismissals across all of the establishments or across some of the establishments of an undertaking over the same period reaches or exceeds the threshold of 20 workers.
The Court noted that it is open to Member States to provide employees with greater protection than the minimum laid down by the EU Directive, but must do so with regard to the interpretation given to the term 'establishment' in EU law. The Court has referred the case back to the Court of Appeal to determine whether the stores in this case can be regarded as separate 'establishments'. If this is the case, then any store with a headcount of less than 20 will fall outside of the collective consultation obligations and the employees who were made redundant will not be entitled to protective awards.
This decision is obviously to be welcomed by employers and whilst we will need to wait for the Court of Appeal's final decision in the matter, any employer considering large scale redundancies across a number of sites can probably safely treat each one separately when determining its obligations.