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Woolies can't pick 'n' mix

An employer is obliged to follow a statutory collective consultation process where it is “proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less...” (section 188 of the Trade Union & Labour Relations (Consolidation) Act 1992).  Failure to do so can expose the employer to claims for a protective award in relation to each affected employee of up to 90 days pay.

Prior to “the Woolworths case” (USDAW and others v UNITE the union and others (2013)), the definition of “one establishment” had been problematic.  Employers with multiple premises, if faced with a need to restructure, would assert that each of their sites was a separate establishment and therefore, if any particular site needed to lose less than 20 employees, the employer would argue that collective consultation obligations were not triggered at that “establishment”, therefore avoiding the heavy administrative burden associated with such obligations.

Woolworths went into administration in November 2008 and ceased to trade on 3 January 2009.  At that time approximately 27,000 employees were made redundant.  UNISON, on behalf of the employees, brought proceedings for a protective award for every employee made redundant as a result of failure by Woolworths to comply with the statutory collective consultation requirements.

The Tribunal at first instance awarded protective awards only in respect of those employees who had been employed at a store with 20 or more employees in total, on the basis that collective consultation was only triggered where 20 or more redundancies had taken place at “one establishment”.  That meant 3,233 employees of Woolworths who had been employed at smaller stores with less than 20 employees, were not given a protective award.

On appeal, HHJ McMullen in the EAT held domestic law did not reflect the requirements of EU Directive 98/59, from which our collective redundancy consultation obligations originate.  To properly reflect the Directive, the words “at one establishment” should be ignored.

Therefore when Woolworths proposed to make 20 or more employees redundant within a period of 90 days or less, it was obliged to consult using the statutory consultation procedure, with appropriate representatives of all affected employees.  It would not have been able to exclude its smaller stores.  Therefore all employees were entitled to a protective award for failure to consult.

Since the case was reported, the EAT have confirmed that the Secretary of State has applied to appeal the decision on the basis that it would have 'wide and unwelcome implications.' However, for the timebeing, any employer with more than one workplace who wishes to restructure the workforce should note that it must consider its business as one establishment for the purposes of redundancy consultation and can no longer regard it as being comprised of multiple establishments.

For further information on the issues raised in this article, please contact Helen Wyatt on 020 7925 8083 or by email at helen@spencer-wyatt.com.
 

+44 (0)20 7925 8080 info@spencer-wyatt.com