USDAW & Wilson v Woolworths & Others: ECJ issues final decision on the meaning of ‘establishments’
The European Court of Justice (ECJ) has issued its final decision on the meaning of establishment, and it comes as a relief for employers.
A recap on the law...
When an employer is intending to make 20 or more people redundant in a 90-day period at any one establishment, they must notify the BIS and follow the minimum procedures required for collective redundancies.
These procedures are to consult with either employee representatives or the union at least 30 days before the first redundancy takes effect. (45 days if 100 or more people are being dismissed.)
Each employee can receive up to 90 days’ pay for a failure to follow these procedures.
When Woolworths collapsed, they considered that the word ‘establishments’ meant each shop.
So at shops where there were 99 employees or less, or 19 or less, they didn’t follow these collective procedures.
The union and the representatives issued a claim for the wages for the lost consultation period.
We last updated you about this case in March 2015. The UK courts had decided establishment meant the whole organisation.
This meant a huge amount of monies owing to the employees for the lost consultation period. So the case was sent to the ECJ.
The ECJ’s decision
Since March, the ECJ has confirmed that ‘establishments’ means each ‘place of work’, so it can be defined as each shop.
It has been referred back to the Court of Appeal in the UK for reverse of the original Employment Appeal Tribunal (EAT) decision.
What this means for you
Back in 2013 when the decision was originally made by the EAT, this essentially meant that the collective consultations had to start 3 months before a redundancy could be made.
And it was irrelevant how unconnected the stores or offices of a business were. It applied to the whole business rather than the ‘establishments’.
This decision has confirmed the position and has meant that the employees are not entitled to compensation for failure to collectively consult, which would’ve been in the millions (based on up to 90 days’ pay each).
It also makes it harder to trigger the collective consultation procedures for redundancy. These are unpopular because of the amount of notice employers have to give employees when redundancies are first considered.
An issue that many businesses view is destabilising during a period when a company is trying to address its issues and avoid closure and redundancies.
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You can find out more about our Employment Law services here.
- Employment Law case update: USDAW & Wilson v Woolworths & Others
- Usdaw v Woolworths/Ethel Austin: the meaning of ‘establishment’
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