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‘Woolly’ Collective Consultation Requirements

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The case of USDAW –v- WW Realisation 1 Ltd (in liquidation) and another was very recently heard by the Employment Appeals Tribunal (EAT). It arose from the high-profile collapse of Woolworths and the closure of its stores.

Given the number of employees affected by the store closures, collective redundancy consultation obligations were triggered. However, pursuant to UK law, each store was treated as a separate establishment so that collective consultation was only carried out at larger stores employing 20 or more employees. Any smaller stores with less than 20 employees were left out of the process.

The employees from the smaller stores were unhappy about this and brought claims for failure to inform and collectively consult. They each claimed a ‘protective award’ of 90 days’ pay by way of compensation for this failure.

The Employment Tribunal considered whether the smaller sites were in fact separate establishments which should have been excluded. In doing this, it considered geographical circumstances. It also looked at the degree of central control and inter-dependence between the stores. It also looked at whether the employees carried out the same or similar activity at each site for shared customers, and whether they moved between sites.

Based on these factors, the Tribunal held that each store was a separate establishment for the purposes of collective redundancy consultation. Therefore, it declined to make protective awards to the employees of the smaller stores who had been left out of the collective consultation process.

The case was escalated to the EAT. The employees again argued they should have been included in the collective consultation process. The EAT’s Judgment has not yet been published as the Hearing only took place in the last few days. However, early reports indicate that the EAT overturned the Tribunal’s decision.

The EAT appears to have held that all stores should have been included in the collective consultation process, on the basis that current UK law directly conflicts with European law.

Significantly, it appears that the reference in UK law to collective consultation obligations only applying where 20 or more redundancies are proposed at a single establishment will now be disregarded moving forward. In other words, collective consultation obligations will now apply where 20 or more redundancies are proposed within an organisation irrespective of the location of the employees.

In addition, as the definition of redundancy is broad for collective consultation purposes (it catches dismissals such as the expiry of a fixed-term contract) it is likely that organisations will now be required to collectively consult far more frequently.

As the Judgment of this case is not yet available, it is difficult to assess the EAT’s rationale for its decision and whether it was correct. It is also difficult to identify whether an appeal is likely. In our view, an appeal of the EAT’s decision probably will take place as, on the face of it, the decision fundamentally changes UK law on collective consultation.

Once the Judgment is published, we also anticipate guidance being issued by the government to clarify what obligations will be placed on employers moving forward.

However, until matters are clearer, we recommend that employers keep a close eye on their financial forecasts and any likely dismissals (whether by reason of redundancy or otherwise). Employers should take advice if it appears that 20 or more dismissals will take effect across the organisation as a whole within any 90-day period.
  

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