On 30th April 2015 the
Court of Justice of the European Union (CJEU) delivered their long-anticipated
Judgment in the well-publicised ‘Woolworths [1]’
case.
This case concerns the obligation on
employers to inform and consult when they propose to make mass redundancies.
The circumstances are rather complex,
but a brief summary of the facts follows:-
In 2008, the well-known retail chain,
Woolworths, entered administration
after a lengthy period of difficult trading.
Shortly afterwards the clothing retailer, Ethel Austin, became a further casualty of the recession as they
too appointed administrators.
Their insolvencies ultimately
resulted in the dismissal, on grounds of redundancy, of thousands of employees
across hundreds of individual stores throughout the United Kingdom.
Employment Tribunal claims for
Protective Awards were brought. The claimants
in those actions sought compensation for the failure of both companies to
inform and consult their former workforce, prior to mass redundancies being
made, in accordance with the statutory duty under section 188 of the Trade
Union and Labour Relations (Consolidation) Act 1992 (“TULRA”).
Section 188 of TULRA requires employers
to consult with affected employees (either via a recognised Trade Union,
elected employee representatives or with the individuals themselves) for a
minimum period of (as is now the case) 30 days prior to the first dismissal
taking place.
However, this duty only arises if 20
or more individuals are employed at the same “establishment”, which,
significantly, is not defined by TULRA.
In ‘Woolworths’, the Tribunal was asked whether the duty to inform and
consult under TULRA applied to separate shops that employed fewer than 20
people, even though more than 20 people were made redundant across the whole
workforce by the closure of the business.
In other words, was it possible to aggregate shop workforces to satisfy
the “20 redundancies” requirement?
At first instance, around 450 former
employees were refused a Protective Award, with the Tribunal determining that
each individual store should be regarded as a separate “establishment” for the
purposes of redundancy consultation.
The Court of Appeal of England and
Wales, which is currently hearing the case on appeal, previously asked the CJEU
to clarify the meaning of “establishment” in order to assist the application of
the law in the domestic courts.
Specifically, the CJEU was asked whether “establishment” could be
interpreted so as to cover the whole of the business, or, alternatively, whether
it should be afforded a more narrow interpretation and apply only to the particular
unit in which the workers concerned were assigned to carry out their
duties.
Although the provisional opinion of
Advocate General Wahl was provided some months ago, the latest Judgment
confirms the CJEU’s position that the term, “establishment”, should be
interpreted as the entity to which the workers made redundant were “assigned to carry out their duties”.
In other words, the Court of Justice
has, regrettably, applied a narrow interpretation.
The upshot is that thousands of
people made redundant by the closure of Woolworths,
Ethel Austin, and indeed other
businesses who have entered administration, may not receive any compensation (depending
upon whether the Court of Appeal’s pending Judgment is consistent with the CJEU’s
– as seems overwhelmingly likely).
We take the view that it is
profoundly unfair that some individuals will likely find themselves unable to
claim a Protective Award (which could equate to up to 90 days’ gross pay)
simply because they worked at a smaller site, even though the whole of the
business is affected by redundancy.
[1] USDAW
and another v WW Realisation 1 Ltd (in liquidation) and others (C-80/14)
David Sorensen - Partner
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