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Collective Redundancy Consultation: Employers’ obligations will remain unclear a while longer as Court of Appeal seeks CJEU decision

The 2013 EAT decision in Usdaw v Woolworths was greeted with a sharp intake of breath by multi-site employers (and employment lawyers) and the subsequent uncertainty seems set to continue in 2014 after the Court of Appeal referred the case to the Court of Justice of the European Union (CJEU) on two points of European law.

It is hoped that by so doing,  the Court of Appeal will clarify the law on the collective redundancy consultation threshold after the Department of Business, Innovation and Skills, controversially not party to the proceedings at the EAT, appealed that decision.

The EAT’s judgment last year imposed a purposive construction on s.188 Trade Union and Labour Relations (Consolidation) Act 1992 so as to delete the words ‘at one establishment’. This has the effect (and at the time of writing the law remains) that where an employer proposes to dismiss as redundant 20 or more employees within a period of 90 days or less and those employees are located in more than one establishment around the UK, that employer is under an obligation to consult with all the employees, regardless of the fact that there may be less than 20 potentially at risk of redundancy at any one of those establishments.

Whilst the EAT’s decision, which found that EU Directive 98/59/EC was not properly implemented, may seem fair (in an equitable sense) on the specific facts of the Woolworths case (why, for instance, should employees at a small Woollies store not have received the same collective consultation as those at a larger store?), the holistic approach which it advocated has far-reaching consequences for many multi-site employers. Those employers using decentralised management structures and accustomed to treating each site as a separate establishment when carrying out large-scale redundancies are now faced with far more onerous obligations.

It is reported that the questions to be referred to the CJEU will cover two distinct issues: the construction of the relevant provisions of the Directive (in particular the meaning of "establishment") and whether the Directive has direct effect.

Whilst an expedited hearing will be sought, the necessity for European intervention will now delay the Court of Appeal’s judgment and employers will have to wait for much needed clarity on this important issue.  The question of what to do with multi-site redundancies in the interim remains a live one.  The cautious approach, given the law as it currently stands, must be to continue to consult across all sites, though there are certainly some employers who are still adopting a bolder line.

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