Collective Redundancies and the Ghost of Woolworths
Finally we have (almost) official confirmation that the 20+ trigger for collective redundancies isn’t relevant until the number of redundancies at individual sites each meets that threshold.
But as the Ghost of Woolworths exits stage left (no doubt muttering “Collective redundancies – to consult, or not to consult: that is the question”) – is the farce over?
Possibly not… So it may just be sensible to summarise what an employer needs to know when deciding whether to inform and consult individually or collectively:
The legal bit: if you’re contemplating 20 or more redundancies at one establishment (think of it as a “unit”) over a 90-day period, you have to inform and consult collectively (with employee representatives) for at least 30 (and sometimes 45) days before the first redundancy takes effect.
The facts: six or so years ago, Woolworths went into administration and closed all its UK stores. There wasn’t any consultation and about 25,000 staff brought claims for protective awards (for failure to consult). The Employment Tribunal followed the one establishment test and found that staff who worked at shops with 20 or more staff should get an award, but that staff who worked at smaller shops shouldn’t. But the Employment Appeal Tribunal (“EAT”) weighed in and applied the 20+ test to the entire undertaking (i.e. it lumped all of the Woolworths shops together). This meant that all of the staff should get a protective award. This has caused major problems for multi-site employers, who had previously treated each site separately under the one establishment test and had only consulted collectively where they had 20 or more staff at risk of redundancy at each individual site.
The fly in the ointment: the effect of the EAT in the Woolworths case disregarding the one establishment test and replacing it with a one undertaking test was that the 20+ threshold was triggered even if you had lots of units (shops, in the Woolworths case) with fewer than 20 redundancies at each of them, but your overall business exceeded the 20+ redundancy threshold.
The consequences: since then, many redundancies that might not have involved any collective consultation (and so could have been carried out quickly on a small scale) were “collectivised” and caused employers to incur a lot more risk and worry, as well as (possibly) pay their employees less redundancy pay, due to the need for a contingency to deal with the cost of external advisers and potential claims by those same employees and their representatives.
The commentaries: many people thought that the EAT was correct and that the UK had failed to implement the relevant EU legislation properly; others thought it was curiously impractical.
It’s all over now: it may now be time to ring out the bells. Why? Because the Advocate-General (“A-G”) of the European Court of Justice (“ECJ”) has opined that:
The UK can now limit the need to consult collectively on redundancies to cases in which the proposed job losses are at the same site (i.e. the place where people actually work) rather than look at the overall number of proposed redundancies.
Hurrah: well, maybe… But there are at least three further flies in the A-G’s ointment:
- there’s still scope to argue about the meaning of “establishment”: what if (say) Prèt à Manger or Costa Coffee operates several stores, but in one shopping centre? Would each store be treated separately, or would they be lumped together and have to be regarded as one establishment?
- the opinion of the A-G is limited to the UK, so the ECJ may come to a different conclusion if it decides similar issues that come to it from other countries.
- there’s also a risk that the ECJ itself, which isn’t bound to follow the opinion of the A-G, may go its own way (not for the first time) and not follow the A-G’s opinion.
Watch this space. Many a drama involves a character leaving through one door and re-entering through another; the Ghost of Woolworths may well do the same.