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Employment A-Z

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Redundancy

USDAW and anor v WW Realisation 2 Ltd and ors ECJ C80/14

Dozens of Woolworths and Ethel Austin stores across the UK closed after the companies when into administration, resulting in the redundancies of thousands of employees. No collective consultation was undertaken with any of the employees. USDAW, on the redundant employees behalf, sought protective awards for the companies failure to inform and consult under S188 of the Trade Union and Labour Relations (Consolidation) Act (TULR(C)A). The key issue was whether the obligation to inform and consult was triggered in stores and workplaces where there were fewer than 20 employees, i.e. does each individual workplace count as an 'establishment' in its own right or not.

The ET ruled that each workplace was its own establishment and accordingly only awarded the protective award to those employed in stores and workplaces where there were 20 or more employees. Approximately 4,500 workers did not receive a protective award. The Union appealed to the EAT.

The EAT ruled that by including the words 'at one establishment' in S.188 TULR(C)A, the UK had failed to properly implement the Directive, and that those words had to be deleted to achieve a compatible interpretation. This meant that 'establishment' took on a very wide definition and could refer to the whole business.

On further appeal, the Court of Appeal decided to refer the question of the Directive's meaning to the ECJ, asking whether the phrase 'at least 20' in Article 1(1)(a)(ii) of the Directive referred to the number of dismissals across all or some of an employer's establishments in which dismissals are effected within the 90 day period, or the number of dismissals in each individual establishment.

The ECJ confirmed that the Directive does not require all 'establishments' to be aggregated for the purpose of the 20 employee threshold. Referring to the ECJ judgement in Rockfon A/S v Specialarbejderforbundet i Danmark acting for Nielsen and ors, an 'establishment' means the unit to which the workers being made redundant are assigned. An establishment does not need to be endowed with a management that can independently effect collective redundancies. Further, an establishment is a distinct entity that may form all or part of an undertaking which has an organisational structure designed to carryout the tasks required for conducting its business. It is, therefore, a permissible approach for the Tribunals to consider each store as a separate establishment.

The case now returns to the Court of Appeal to determine whether the ET and EAT's interpretation that the dismissed employees were assigned to separate 'establishments' is the proper interpretation. However, the union USDAW have issued a press release indicating that they do not expect the Court of Appeal to rule in their favour following the ECJ decision but that they will now work towards seeking an amendment to the law so that in large-scale redundancy situations, workers from all workplaces affected will be treated as part of the same consultation.