European Court of Justice decides meaning of “establishment” in Woolworths collective redundancy cases.
We previously reported (available here) on Advocate General Wahl’s opinion on the meaning of “establishment” and how it would impact the collective redundancy threshold to inform and consult employees (where at least 20 workers are being dismissed within a period of 90 days).
The European Court of Justice (ECJ) has now given its binding judgment on the matter, in line with the Advocate General’s opinion. “Establishment” means, simply, the unit to which workers made redundant are assigned to carry out their duties.
The ECJ relied on a definition from previous case law: a “distinct entity, having a certain degree of permanence and stability, which is assigned to perform one or more given tasks and which has a workforce, technical means and a certain organisational structure allowing for the accomplishment of those tasks”.
What does this all mean for collective redundancy?
Collective consultation with employee representatives is only needed where 20 or more redundancies are proposed at the same establishment (read: unit). Employees would not need to be aggregated across the whole business.
In practice, this means that the collective consultation threshold will be harder to hit for multi-site companies such as retailers who might be restructuring across different sites.
Instead of having to collectively consult where 20 employees are being made redundant across the whole business (even if only one employee was being made redundant per store), the obligation will only be triggered where 20 employees are being made redundant in one unit (which could be, for example, one store).
The case has now been returned to the referring UK court to rule on whether, in light of the above interpretation, the thresholds for the obligation to inform and consult have been reached in the Woolworths and Ethel Austin cases.
Companies can hopefully rest assured: the ECJ’s decision not only clarifies the law in this area but is also highly favourable for multi-site businesses.
Posted on May 19, 2015