Usdaw v Woolworths/Ethel Austin: the meaning of ‘establishment’

Usdaw v Woolworths/Ethel Austin: the meaning of ‘establishment’

Under UK law, an employer is required to consult “collectively” (that is, with the recognised trade union if there is one, or employee representatives if not) for minimum periods of time, ranging from 30 days to 45 days, in certain situations.

In redundancy cases, current UK legislation states that the collective consultation duty is triggered when an employer is proposing 20 or more redundancies at “one establishment” within a period of 90 days or less. Generally (except in a few unusual cases) most people have taken “one establishment” to mean one site.

This case was brought by the union which represented a large group of former employees of Woolworths and Ethel Austin. After both companies went into administration, large scale redundancies were carried out but a sizeable number of employees were not involved in the collective consultation process as they worked in stores with fewer than 20 staff. However, the Employment Appeal Tribunal has ruled this to be contrary to European Law. The EAT decision basically means that the legislation has to be read as if it no longer contains the words “at one establishment.” As a result, if an employer is planning 20 or more redundancies across its workforce as a whole, the duty to collectively consult will be triggered.

What this means for you

This decision highlights how the law can be a moving feast as the process seems to have been in compliance with long established practice and the way UK law was generally understood at the time of the redundancies.

Against the context of the last few years (and where many feel we still are in economic terms) this is a significant decision. Those considering redundancies in the future need to look at the total number of redundancies across the whole workforce and not just at each site. The result is naturally going to be that more employers will be caught by the obligation to collectively consult and there is no hiding from the fact that redundancy procedures have the potential to be lengthier and more complex in the future - but the key is to be aware of this, to plan for it and find out early what you need to do to comply.

The union’s claims having been successful, the Government must now foot the bill due to the fact that both employers in this case are insolvent. The compensation bill is reportedly going to be in the region of 60-90 days gross pay each for some 4,000 employees. The Government is seeking permission to appeal as it sees the decision as having “wide and unwelcome” implications. Watch this space…

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