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Collective Redundancies: Definition of Establishment

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The Court of Justice of the European Union (the “ECJ”) has today handed down an important decision concerning employers’ collective redundancy obligations.

When Woolworths went into administration in 2008, stores were closed across the UK and thousands of employees were made redundant. Woolworths treated each store as a separate establishment, such that those employed at stores with less than 20 employees were not subject to collective consultation.

The Employment Appeal Tribunal thought that this approach was wrong; Woolworths ought to have consulted collectively with all employees affected by the store closures.

Woolworths appealed to the Court of Appeal, which asked the ECJ to confirm the definition of “establishment”. The ECJ have now held that:

The Court of Appeal will shortly apply the ECJ’s decision to the Woolworths case. The Court of Appeal will inevitably find that Woolworths took the correct approach by excluding those employed at stores with 20 employees or less from collective consultation.

This is positive news for multi-site employers as there’s now no requirement to keep a central record of all dismissals made across all sites within a rolling 90 day period. It will still be a question of fact for each case, but it’s likely that each site can be treated as a separate establishment.

Questions?

If you have any questions on this or any other HR issue please contact a member of the employment law team:

Deborah, 0113 336 3328 - deborah.warren@clarionsolicitors.com 

Victoria, 0113 336 3414 - victoria.clark@clarionsolicitors.com 

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