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An update on the Woolworths case

Why the meaning of “establishment” in the Woolworths case will impact on the collective redundancy threshold to inform and consult employees

A tricky question affecting collective consultation rights was recently referred to the European Union Court of Justice (“ECJ”) by our Court of Appeal, in USDAW v Ethel Austin Ltd (In Administration) and another case (“the Woolworths case”): whether to omit the words “at one establishment” from English law (the Trade Union and Labour Relations (Consolidation) Act 1992) to make it compatible with European Law. The phrase is currently part of a collective redundancy obligation to inform and collectively consult, when an employer proposes to dismiss as redundant, within a period of 90 days or less, 20 or more employees “at one establishment”.

A wide interpretation of “establishment” would mean considering numbers of proposed redundancies across an employer’s whole workforce, making it easier for employers to hit the threshold to inform and consult collectively (and in the above case, would make the employers liable for more protective awards as a result of failing in their obligations to consult).

Though the ECJ has not yet decided its meaning, its Advocate General, Wahl, has given his non-binding opinion: “establishment” means the local employment unit to which workers are assigned to carry out their duties (though each Member State may define the meaning of “unit”). If the ECJ follows his opinion, this could mean (favourably, for employers) that the threshold may be harder to hit. Until the final decision is published, however, employers should continue to use a wider, more cautious, approach when calculating whether they hit the threshold to collectively consult employees.

For more information on this or any employment law issue, please contact a member of our employment team.

Posted on March 9, 2015

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