Employment Article Sep 2014

Collective Redundancy - The Final Verdict on 'Establishment'

May 19, 2015

Under current UK legislation, if an employer proposes to make 20 or more employees redundant in ‘one establishment’ within a period of 90 days or less, the employer has a duty to collectively consult employee representatives on the proposed redundancies. This consultation must take place in good time and before any dismissals are confirmed. Failure to comply with any of the rules regarding consultation can result in a protective award being made to affected employees of up to 90 days’ gross pay.

As discussed in our previous article on this topic, when Woolworths ceased trading at the end of 2008, approximately 25,000 employees brought claims for protective awards on the basis that the administrator had not complied with its consultation duties to consult with employees. This sparked much discussion and debate as to what constituted ‘one establishment’ for the purpose of triggering the duty to collectively consult employee representatives. The key question being whether duty is triggered when an employer is proposing to make 20 or more employees at one site redundant, or 20 or more employees in the entire business across a number of sites.

The European Court of Justice has now given its final decision in this case, confirming that ‘establishment’ means the entity to which the workers made redundant are assigned to, to carry out their duties and not the business as a whole. It was therefore held that Woolworths did not need to collectively consult with staff who worked in a store where less than 20 people were being made redundant. 

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