Email Us 01473 688 100

Case Law

New definition of “one establishment” for collective redundancies

This article explains the recent ‘Woolworths’ case and its impact on employers obligations to inform and consult where they propose to make 20 or more employees redundant.

USDAW v Ethel Austin Ltd (in administration) and another

Background

For once this is a case where we should briefly set out the statutory provisions.

Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (‘TULRCA’ for short) requires employers to consult collectively if they propose to make redundant 20 or more employees within a period of 90 days “at one establishment”. Historically, employers have treated different locations as separate establishments. They have not collectively consulted, for example, if there were fewer than 20 employees to be made redundant at one office. This is an approach supported by case law (until now!).

TULRCA was introduced to implement a European Directive which does not make any reference to ‘one establishment’. This case considers the conflict.

One final introductory point is that domestic legislation, in this case, TULRCA, must be interpreted by judges in a way which is consistent with and gives effect to European legislation.

The facts

Woolworths and Ethel Austin went into administration in 2008 and 2010 respectively. In excess of 28,000 employees were dismissed for redundancy from numerous stores across the country. In the region of 4,400 workers were dismissed from stores where there were fewer than 20 employees employed at that store.

Claims were brought by former employees that Woolworths and Ethel Austin failed to collectively inform and consult with them in breach of TULRCA. The employees claimed protective awards.

Two separate employment tribunals held, consistent with the case law, that each of the stores was a separate “establishment”. This meant that Woolworths and Ethel Austin were only obliged to collectively consult where they were proposing to make 20 or more employees redundant at “one establishment” over 90 days. This excluded the 4,400 or so workers dismissed from stores with fewer than 20 people working there. The outcome was that only employees who had been employed in stores with at least 20 or more employees were eligible for a protective award. The decision was appealed.

The decision

The EAT overturned the tribunals’ decisions. The EAT had to interpret TULRCA so that the obligation to collectively inform and consult arises when 20 or more are dismissed ‘irrespective of where they work’.  To do this it concluded that the words “at one establishment” should be removed from section 188 of TULRCA as it did not reflect EU law and should be disregarded from the legislation for the purposes of collective redundancy involving 20 or more employees. Woolworths and Ethel Austin should have consulted with all employees, not just those who were employed at stores with 20 or more employees. All the employees at the smaller stores were, therefore, entitled to the protective award.

In practice

The EAT’s decision represents a significant change in the law and overturns years of accepted practice.  It places a more onerous obligation on employers.  It requires an employer to collectively inform and consult whenever it is proposing to make redundant at least 20 employees wherever they are located. The employees’ place of work will be irrelevant. Redundancy exercises will inevitably become more cumbersome, expensive and protracted.

If you are currently in the process of making redundancies, or considering doing so, seek urgent legal advice.  The cost of getting it wrong could be a protective award of up to 90 days’ gross pay for each affected employee – a needless expensive mistake. The employment law solicitors at Quantrills will be happy to help you.

The Department for Business, Innovation and Skills has, we understand, applied for permission to appeal this decision so be on the look out for an update.

23 January 2014 | This case has now been referred to the European Court of Justice.

Book a phone consultation

Apply for a FREE phone consultation with one of our experienced employment law solicitors to discuss your case, how we can help and how much it is likely to cost.

Selected evening and weekend appointments available.

Simon Quantrill

How can we
help you?

01473 688100

Tell us about your case

Our online form is the easy way to tell us about your case and employment details.

Short of time? Our ‘save and resume’ features let you save your answers and complete the form later.

Reasons to Choose
Quantrills Solicitors

Trusted advice

Attention to attention

Speed of response

Pragmatic solutions

FREE Employer
Newsletter

Subscribe to our email based hrlegalnews to receive details of our Knowledge Bank & HR Updates updates and our forthcoming events.

Client Testimonials

View more

Becoming our client is a straightforward process. However, before choosing Quantrills as your employment law solicitors you’ll want to be completely sure we are the right people to help you achieve your objectives. Having looked at our web site, if you like our approach and would like to discuss how we can help you, getting started is easy.

Step 1

Get in Contact

Contact us and tell us a little about your problem and the help you are looking for.

Step 2

We’ll contact you

We’ll follow up with a free no obligation initial telephone call or email to discuss your case.

Step 3

Invitation to become our client

Provided we are happy we can help you, we’ll invite you to become our client.

Step 4

You instruct us

If you agree to our invitation, you simply have to confirm this is writing or by email and confirm your instructions.

Step 5

We’ll start to act for you

Congratulations! You are now a client of Quantrills and we’ll start work on your instructions.

At Quantrills we are flexible in how we work with you and how we progress your case...

In Person

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

Get Directions

By Telephone

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

01473 688 100

Or request a call back

By Online Form

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

View Forms

By Email

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

Email us