The Advocate General of the European Court has held that the meaning of ‘establishment’ for the purposes of collective redundancy consultation does NOT necessarily need to take into account the whole business.  Businesses should, subject to national law, be able to look at individual branches and/or offices when counting the 20 redundancies that trigger collective consultation.

Background

You will remember our reporting on this case previously.

It follows the fall-out of the administration of Woolworths in November 2008. The question was whether the individual branches needed to collectively consult where fewer than 20 employees were being made redundant at branch level, or whether the whole of Woolworths’ business needed to be looked at when counting to the 20. This turned on the correct interpretation of the meaning of the word ‘establishment’ in the relevant legislation.

The EAT held that the whole business should be looked at. This meant that the more onerous collective consultation requirements would apply a great deal more often, because the 20 should be taken from across the whole business, rather than individual branches or offices.

The Court of Appeal referred the issue to the European Court of Justice.

The Advocate General at the ECJ has made a preliminary decision that national courts need not look across the whole business when counting up the 20, but that there was nothing stopping them from introducing rules that did require this. This will mean that it is up to the English Government/Judiciary to decide which approach they wish to take.

The issue is yet to be decided by the European Court of Justice, however, but they will usually follow the point of view of the Advocate General.

Implications

The massive downside of having to collectively consult is that businesses are open to a potentially exorbitant ‘protective award’ for not following some very complicated rules – including the election and consultation of staff representatives – to the letter.

Until we hear from the ECJ, however, employers would be well advised to err on the side of caution, and look across their business when adding up the 20 redundancies within 3 months which is the trigger point for collective consultation.

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Updates: For employers: Redundancies | For employees: Redundancy |

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