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Woolworths: judgement on collective redundancy consultation expected

I still miss my local Woolies, particularly around Christmas, when it used to be a reliable source of last-minute, slightly disappointing presents for younger relatives (I now have to buy these online). 

However, it is of some comfort that the spirit of Woolworths lives on not just as an internet retailer (selling, among other things, pre-packaged pick'n'mix – surely this misses the point?) but also as a long running employment claim arising from the mass redundancies which unfortunately resulted from the closing of the stores.  The claim has gone all the way to Europe, and we are currently awaiting an opinion from the Advocate General as to whether the EAT got it right when it issued a judgment in the case which significantly expanded employer's collective redundancy consultation obligations by effectively removing the words 'at one establishment' from section 188 of TULRCA. 

In the meantime, here is a brief recap of the litigation so far.

Woolworths' 800 stores closed their doors for the last time in 2008 and 2009 when the company went into administration, resulting in tens of thousands of redundancies.  Following this, the Union of Shop, Distributive and Allied Workers (USDAW) and employee representatives applied to the Employment Tribunal for protective awards on the basis that Woolworths had failed to engage in collective consultation in accordance with section 188 of TULRCA, which requires employers to inform and consult employees where they propose to make redundant 20 or more employees at the same establishment. 

The Tribunal upheld the claim and made protective awards in respect of employees in stores which employed at least 20 people. However, it found that the collective redundancy consultation provisions were not triggered in stores employing fewer than 20 people, as each store was a separate 'establishment'.  This meant that over 3,000 ex-Woolworths employees didn’t qualify for protective awards.

USDAW appealed to the EAT, arguing that the wording of section 188 is narrower than that contained in the European Collective Redundancies Directive, which section 188 is intended to implement.  USDAW suggested that section 188 should therefore be construed in one of the following ways:

-       As if the reference to 'at one establishment' was deleted;

-       As if the wording 'at one establishment' was replaced by 'at one or more establishments'; or

-       With the word 'establishment' being interpreted as the whole of the relevant business, rather than each location.

The EAT upheld the appeal, and found that the words 'at one establishment' should be deleted for the purposes of interpreting section 188 in order to provide workers with the protection which the Directive intended (it would also, if necessary, have been happy to accept the wider definition of 'establishment' proposed by USDAW).  The EAT also found, perhaps surprisingly, that the Directive had direct effect (and could therefore be enforced in UK courts by individuals) as one of the respondents to the case was the Secretary of State (because the employer, Woolworths, had gone into administration).   

Until that point the government had not sought to be involved with the litigation (apparently, according to the EAT, having 'misunderstood the legal issue in these appeals, and its importance').  However, when leave to appeal was granted BIS elected to do so and in January 2014 the Court of Appeal referred the case to the ECJ.  In November 2014 the ECJ therefore considered issues around the correct construction of the European Collective Redundancies Directive and section 188 of TULRCA, and whether the Directive has direct effect in the UK.  The Advocate General's opinion on the case is expected on 5 February, and the ECJ's judgment (which will probably, but not necessarily, follow the AG's opinion) will follow.

In the meantime, employers dismissing employees across different locations by reason of redundancy should consider following the EAT's judgment and assess the need for collective consultation on the basis of the total number of redundancies contemplated across the business, not just at any one location.  Otherwise they run the risk of being liable for protective awards of up to 90 days' actual pay for each affected employee.

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