07 June 2013 #Employment
It has been reported that the EAT has decided that the establishment test for collective redundancies is to be “disregarded” and that all employers making over 20 redundancies within a 90 day period must collectively consult, regardless of whether those employees work in one place or whether they are based at different ‘establishments’.
This has huge implications for employers, particularly large employers regularly making small numbers of redundancies across multiple sites. These redundancies may add to 20 across the business within a 90 day period and, following this case, these cross-site redundancies may now trigger collective consultation requirements.
The EAT is reported to have overturned the tribunal’s decision in the case of USDAW and others v WW Realisation 1 Ltd (in Liquidation) and another. In this case, the trade union representing the former staff at Woolworths, who were made redundant in late 2008, claimed a protective award on the basis that the store had not collectively consulted over the redundancies. The tribunal found that each store was a separate establishment and, as there were fewer than 20 employees at each store, collective consultation was not triggered.
Collective consultation obligations under the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) apply where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. Where an employer fails to comply with the collective consultation provisions, a tribunal may make a protective award of up to 90 days` actual gross pay for each dismissed employee.
For some time, it has been acknowledged that the words "at one establishment" in TULRCA are incompatible with the underlying EU Collective Redundancies Directive, under which the obligations would be triggered if the total number of redundancies proposed in a 90 day period is 20 or more, regardless of where the employees are based.
Although the judgment has not yet been published, a press release issued by USDAW’s solicitors states that the EAT ruled that the words "at one establishment" are to be "disregarded" for the purposes of any collective redundancy involving 20 or more employees. This would be a significant change to the law, meaning that once it is proposed that at least 20 employees in a single business are to be made redundant, their place of work would be irrelevant for the purposes of triggering the consultation obligations.
Subject to any further appeal or Government intervention, this means that with immediate effect employers who have a number of branches or offices across the UK will need to ensure that they are aware of how many dismissals which fall under the ambit of redundancy consultation are proposed across the company at any one time and consider carefully their obligations to collectively consult. Failure to do this correctly could mean employers inadvertently breaching the collective redundancy obligations and risking protective awards (of up to 90 days’ gross pay per affected employee) being made against them.
We will provide a further update once the judgment has been published.