Collective redundancies: Is a return to normality on the horizon?

Collective redundancies: Is a return to normality on the horizon?

Those responsible for employment decisions in firms and businesses with multiple office locations will have been relieved that the Advocate General recommended a reversal of the Employment Appeal Tribunal’s interpretation of ‘one establishment’ in the Woolworths cases (USDAW v Ethel Austin Ltd (In administration) UKEAT/0547/12/kn[2013] IRL886) when his opinion was handed down on 5 February 2015. However, as the European Court of Justice is not obliged to follow the AG’s opinion, we still have some time to wait for further clarity on this issue.

What should firms do if they currently need to make redundancies in several locations?

Until the ECJ delivers its judgment, in the UK the Employment Appeal Tribunal’s decision in USDAW v Ethel Austin Ltd technically remains good law and therefore it is safest to proceed in accordance with the principles established. Therefore, as the EAT found that the ‘one establishment’ wording in s188 Trade Union & Labour Relations (Consolidation) Act 1992 (TULRA) should be disregarded, firms will still have to aggregate the total number of potential redundancies across all of their office or branch locations.

If this means that they are proposing to make 20 or more employees redundant within 90 days, then they will have triggered the obligation to collectively consult under TULRA.

In summary, this requires that appropriate employee representatives are elected and informed and consulted regarding the proposed redundancies. In addition, the Secretary of State must be notified and if there is a relevant Trade Union, they must also be consulted.

Lastly, minimum periods of consultation apply. For 100 or more redundancies, there must be at least 45 days consultation before the first redundancy dismissal happens and then 30 days consultation for less than 100 redundancies. This is all in addition to the usual requirements to ensure the decision to dismiss is reasonable.

In particular, any selection criteria applied must be fair and capable of objective justification and the individuals affected should have an opportunity to suggest alternatives to redundancy and look for alternative employment within the organisation. The process should, of course, conclude by offering a right to appeal.

If followed by the ECJ, the AG’s opinion suggests that the ‘one establishment’ wording in s188 is not inconsistent with the European Directive that defines collective redundancy (which is implemented by TULRA). In other words, the opinion confirms that establishment can mean the unit to which the workers are assigned to carry out their duties rather than the whole undertaking.

If the ECJ follows this, then the Court of Appeal should confirm that the EAT decision was wrong and reinstate the ‘one establishment’ wording in s188 TULRA. This will mean that, once again, employers facing the prospect of redundancies at several different sites and locations can assess whether they are part of the same establishment or not depending on the specific arrangements. It will remain possible that multiple sites should be considered as ‘one establishment’ in certain circumstances, but it will avoid employers automatically having to go through the process of aggregating the numbers at very separate units, which can be very difficult in reality.

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