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An Established Point of Law?

Meredith Hurst Monday, June 17, 2013

USDAW and others v WW Realisation 1 Ltd 

It has long been established that when employers are proposing to dismiss as redundant 20 or more employees at one 'Establishment' within a period of 90 days or less, that they are obliged to collectively consult.  This imposes statutory obligations upon employers, as to the information to be provided and the timing of consultation.

TheUKlaw implements the European Collective Redundancies Directive but does not mirror it.  TheUKposition is that if an employer proposes to dismiss as redundant 20 or more employees, then as long as there are less than 20 at each site, the collective consultation rules are not triggered. This is the case even if the number of employees to be dismissed across all sites exceeds 20. For the purposes of theUKlaw, each site may be considered a separate 'Establishment'.   

The reason why this distinction is so important is because where an employer fails to comply with the collective consultation provisions, an employment tribunal may make a protective award of up to 90 days' actual gross pay for each dismissed employee. 

InUSDAW and others v WW Realisation 1 Ltd,claims for protective awards were brought by the trade union on behalf of former staff at Woolworths who were made redundant after the chain closed its stores at the end of 2008. An employment tribunal found that each store was a separate 'Establishment'. Consequently, the duty to consult was not engaged in respect of stores with fewer than 20 employees and so employees at those stores could not benefit from a protective award. 

TheUnionappealed to the employment appeal tribunal (EAT). At the EAT, the Judge indicated that the words 'at one Establishment' in theUKlegislation are to be disregarded for the purposes of any collective redundancy involving more than 20 employees. What this means is that once it is proposed that more than 20 employees in a single business are to be made redundant, their location becomes irrelevant. 

Subject to any further appeal, this case would bring about significant change to the current law of collective redundancy consultation.

It has long been the case that when an employer has to make redundancies across a number of disparate sites, those advising the employer would do so on the basis that each individual site is an 'Establishment' for the purposes of collective consultation obligations. This assists the employer when there are less than 20 employees at each site but where there may be more than 20 employees across the business as a whole. Whilst there were borderline cases, employers could usually be confident in asserting that different locations were different 'Establishments' when it came to the obligation to collectively consult. 

The indication by the EAT is that reference to 'Establishment' in the legislation should be removed all together.  We shall have to see how this issue is resolved.  

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