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Collective redundancy consultation
[ch 11: pages 330-332]An employer has a legal duty to consult over collective redundancies if it proposes to dismiss as redundant 20 or more employees at one establishment within a 90-day period. This law is set out in Chapter II (section 188 onwards) of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). In Northern Ireland the same rules are contained in Part XIII of the Employment Rights (Northern Ireland) Order 1996 (article 216 onwards).
Under section 188 of TULRCA, to trigger the duty to consult collectively, 20 or more employees at risk of redundancy must all work at one establishment.
The ECJ has ruled that “establishment” in this context refers to the business unit where employees are assigned to work. It can still be an establishment even though it does not have a management capable of carrying out collective redundancies. It need not be a separate legal entity, as long as it is a distinct and stable entity with its own workforce. This is the unsatisfactory conclusion of legal proceedings brought by retail union USDAW, following the collapse of high street retailer Woolworths. It means that the duty to consult collectively is not triggered in most workplaces where less than 20 employees are at risk of redundancy within a 90-day period, even though they are part of a much larger workforce and even though the redundancies are part of a redundancy exercise spread across the whole business. In other words, employees based at smaller business units have weaker redundancy consultation rights than those working in larger units, even though the redundancy scenario they face is exactly the same in each case:
USDAW won protective awards for thousands of affected employees after the collapse of the Woolworths and Ethel Austin retail chains when administrators failed to consult with the union before shutting the stores. However, 4,500 employees at stores with fewer than 20 employees got no protective award, because under UK law, collective consultation obligations are triggered only where 20 or more redundancy dismissals are proposed within a 90-day period at one establishment. Each store was treated as a separate “establishment” by the tribunal. USDAW took a claim to the ECJ for these employees, arguing that the UK was in breach of the Collective Redundancies Directive.
USDAW argued that there should be collective consultation whenever 20 or more employees sharing the same employer are at risk of redundancy, no matter where in the business they are based. Confining collective consultation to establishments where 20 or more employees happened to be based produced arbitrary and unfair results. Especially where, as in the Woolworths example, a large retailer closes nearly all its stores, the same redundancy risks are faced by everyone affected, all of whom have the same need for collective consultation and representation, irrespective of the size of each store. It made no sense, said USDAW, to limit protection to large stores and to deny consultation rights to those working in the smaller outlets.
The ECJ refused to rule in USDAW’s favour. An establishment, for the purposes of collective consultation, said the ECJ, is the business unit where the employee is assigned to work. The ECJ sent the case back to the UK employment tribunal to rule on whether each retail store was a separate establishment. It is very likely from the ECJ’s judgment that this is what the tribunal will rule.
USDAW v (1) WW Realisation 1 Limited (in liquidation) (Woolworths); and (2) Ethel Austin Limited, Secretary of State for Business Information and Skills Intervening, Case C-80/14
http://curia.europa.eu/juris/celex.jsf?celex=62014CJ0080&lang1=en&type=TXT
The TULRCA provisions on collective redundancies do not apply to Crown employees (those working for a government department or carrying out its functions). However, civil servants have consultation rights under their civil service redundancy policy.
The definition of redundancy dismissal for the purposes of collective consultation is wider than the statutory definition for individual redundancies in section 139 ERA 96, set out at the start of this chapter. The duty to consult collectively will be triggered by any “dismissal for a reason not related to the individual concerned”. The implications of this wider test are discussed on page 335.
Even if there is no statutory duty to consult over collective redundancies because fewer than 20 employees are affected, there must be individual consultation of those at risk. A failure to consult an individual at risk of redundancy can make the dismissal unfair (see Chapter 10: Dismissal).
The employer’s statutory duty is to consult collectively in good time about ways of avoiding dismissals, reducing the number of employees to be dismissed, and mitigating the consequences of dismissals (see page 338-339: The subject matter of collective consultation).