News and Updates

Woolies could pick 'n' mix

We refer to our 2013 article (which can be viewed here) outlining the consequences of the Employment Appeal Tribunal decision in the case of USDAW and others v WW Realisations 1 Ltd (in liquidation) and others (“the Woolworths case”).

In that case, the extent to which an employer was obliged to engage in collective consultation under the Trade Union and Labour Relations (Consolidation) Act 1992, in the event that it proposed to dismiss as redundant 20 or more employees “at one establishment” within a period of 90 days or less, had been significantly extended. 

The EAT had made a finding that a protective award for failure to consult correctly, should be made in respect of all Woolworths employees when it ceased to trade in early 2009, including those employees in stores employing less than 20.  This was inconsistent with previous case law on the definition of establishment.  The original Tribunal judge had found that individual stores were separate “establishments” and that no protective awards should be made in respect of employees in stores employing less than 20 as no obligation to collectively consult existed at those stores.

The EAT decision had created a situation in which an employer with multiple sites would, in a restructuring or insolvency situation, need to treat all sites as one establishment, for the purposes of redundancy consultation process if it wished to avoid the risk of incurring liability for a protective award of up to 90 days pay for each employee affected.  This represented a significantly increased administrative burden and potential time delay with economic consequences which a business might be poorly placed to meet, if the restructuring was prompted by financial difficulty. 

It also had implications for the government and tax payer.  Where an employer is insolvent, an employee is able to apply for payment of a redundancy payment, a protective award and other specific payments, subject to statutory limitations, from the National Insurance Fund.

The Woolworths case was appealed to the Court of Appeal and the Court of Appeal referred a number of questions on the case to the European Court of Justice, as domestic law is based on the European Collective Redundancies Directive.

On the question of what is an “establishment”, the ECJ confirmed previous judgments it had made and stated that an establishment is the unit or entity to which the workers made redundant as assigned to carry out their duties.  Previous cases had clarified that an establishment may consist of a distinct entity, with a degree of permanence and stability, which is assigned to perform one or more tasks and which has a workforce, technical means and organisational structure to allow it to do so.  It is not necessary for the entity to have legal, economic, financial, administrative or technological autonomy, its own independent management or geographical separation from other units and facilities of the undertaking.

The Court of Appeal must now provide judgment in the Woolworths case in light of the ECJ’s finding, and determine whether individual Woolworths stores were separate establishments or not.  That judgment is expected to be consistent with the ECJ’s position and will hopefully provide a degree of practical relief for multi-site employers who may be facing a restructuring requirement. 

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