Yesterday’s decision by the European Court of Justice (ECJ) will come as welcome news for employers with multiple sites across the UK and will mean thousands of former employees at Woolworths and Ethel Austin will miss out on redundancy payments.
Woolworths and Ethel Austin were active on high streets across the United Kingdom until they hit financial problems, went into administration and dismissed thousands of employees on the grounds of redundancy.
Where an employer proposes large scale redundancies of 20 or more employees within a 90 day period or less, it is required to consult on its proposal with employees individually and either the appropriate Trade Union or the elected ‘employee representatives’ of the affected employees.
When considering its headcount Woolworths and Ethel Austin counted each store as a separate ‘establishment’, which meant it did not engage in collective consultation with staff who worked in a store with fewer than 20 employees.
At first instance, the court awarded protective awards in favour of a number of the employees made redundant, although about 4,500 former employees were refused a protective award, on the grounds they had worked at stores with fewer than 20 employees and that each store was held to be an ‘establishment’.
The ECJ found where an ‘undertaking’ (Woolworths and Ethel Austin) comprises of several ‘entities’ (the individual stores), it is the entity to which the workers made redundant were assigned to carry out their duties that constitutes an ‘establishment’ and not the undertaking as a whole.
Therefore when establishing headcount to see whether Woolworths needed to engage in collective consultation (required when contemplating 20+ redundancies in a period of 90 days), they were right to count each store as a separate ‘establishment’ and meant they did not need to engage in collective consultation with staff who worked in a store with a headcount of less than 20.
The decision means employers who have multiple sites of less than 20 employees and need to make large scale redundancies will not be required to enter a collective consultation process. This will make the redundancy process far less onerous and costly for employers.
Case C-80/14 Union of Shop, Distributive and Allied Workers (USDAW) and B.Wilson v WW Realisation 1 Ltd (in liquidation), Ethel Austin Ltd and Secretary of State for Business, Innovation and Skills.