Collective redundancy consultation just got harder for multi-site organisations as a result of an EAT judgement
The outcome of the recent Employment Appeal Tribunal collective redundancy case, Usdaw v WW Realisation 1 Ltd, commonly referred to as the ‘Woolworths’ case, has taken many HR professionals and employment lawyers by surprise. The full judgment has recently been published.
In summary, the EAT decided that the threshold of 20 or more employees for collective redundancy purposes should be looked at across all of an employer’s establishments and not for each separate establishment. Assuming this decision is not overturned, this would mean that a national supermarket giant, for example, would have to match the eight redundancies identified at its Inverness store, with the seven at its Falmouth store, and nine at its Leicester warehouse. This would be a tall order for most employers.
Representation
The Employment Appeal Tribunal hearing the case was clearly disappointed that there were no representations by any of the respondents to balance the employees’ arguments presented to it. The companies involved - Woolworths and Ethel Austin - are both in insolvency administration proceedings. Presumably the administrators for the companies declined to attend because there was no money to fund any representation. The state was also a respondent but also, perhaps more surprisingly, declined to attend. Around 4,400 redundant employees were relying on this decision for financial compensation and will now look to the publicly financed Insolvency Fund for payment of their protective awards.
European court
It is unlikely that this decision will decide the issue once and for all. Even if the state continues to be disinterested, the industrial tribunal in Northern Ireland has referred a similar issue direct to the Court of Justice of the European Union. The case is called Lyttle and others v Bluebird, and it concerned redundancies from the Bon Marche chain of clothes stores. It is unusual for an employment tribunal (industrial tribunal in Northern Ireland) to refer questions directly to Europe but, in the light of the concerns and uncertainty caused by the Woolworths decision, this is a welcome step. Should the Secretary of State decide to appeal the Woolworths decision, in the light of the existing referral to the European court, it would surely be sensible either to add to the existing referral, or await its outcome, rather than making any further domestic decisions on the issue.
Implications
As matters stand, employers have to assume that the current EAT decision is correct and should amend their practices accordingly. The potential benefits provided to employers through recent changes to collective consultation legislation (such as the reduction in the minimum consultation period for large-scale redundancies) will be more than offset by this decision, at least as far as multi-site employers are concerned.
Checklist
It’s worthwhile having a quick recap on where employer’s collective redundancy consultation obligations currently stand, taking into account this latest decision:
- the obligation to consult applies where an employer is proposing to dismiss as redundant 20 or more employees. There is a question mark now over whether this is looked at per establishment or across the organisation as a whole
- where there are 100 or more redundancies proposed, the latest date that collective consultation can begin is 45 days before the first of the dismissals takes effect (this was reduced from 90 days from 6 April 2013)
- where there are 20 to 99 proposed redundancies, the latest start date remains at 30 days before the first dismissal
- the maximum protective award for a failure to comply with the requirement to consult remains at 90 days
- there remains some uncertainty about when the requirement to consult begins, particularly in the light of a workplace closure. Unless there are overriding commercial reasons not to, an employer should ensure that the closure is an item open to collective consultation
- where an employer recognises a trade union, then the consultation should be with the union. Otherwise appropriately appointed/elected representatives should be consulted
- consultation should be with a view to reaching agreement and should, as a minimum, include ways of avoiding the redundancies, reducing the numbers of redundancies and mitigating against the consequences of the redundancies
- the collective consultation process is not a substitute for a fair dismissal process and employers should ensure they apply fair selection and individual consultation procedures before reaching decisions on an individual redundancy dismissal.
Mark Leach is an employment partner at national law firm Weightmans
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