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No more “establishment” test?
Although the text of section 188 refers to the need for the 20 or more employees to be “at one establishment”, in a landmark decision, USDAW v Ethel Austin Limited and Woolworths (in administration) [2013] UKEAT/0547/12/KN, the EAT decided that the words “at one establishment” must be deleted to comply with the EU Collective Redundancies Directive (No.98/95):
After retail chain Woolworths went into administration in 2008, insolvency practitioners failed to consult with Usdaw, the recognised union. Usdaw brought a successful application for a protective award, winning £67.8 million for 24,000 Woolworths employees. However, 3,000 employees lost out because the Employment Tribunal decided that each shop unit was a separate establishment, so that there was no obligation to consult collectively where individual shops employed less than 20 employees.
USDAW appealed to the EAT who agreed that this construction of section 188 of TULRCA was contrary to the Directive’s objective of protecting workers’ rights on redundancy. The EAT went further, ordering that the words “at one establishment” in section 188 restricted implementation of the Directive and that compliance with the Directive could best be achieved by deleting these words from the legislation.
Usdaw v Ethel Austin Limited and Woolworths (in administration) [2013] UKEAT/0547/12/KN
The case has major implications. It means that the duty to consult collectively is now triggered when an employer proposes to dismiss at least 20 employees as redundant within 90 days, regardless of where they work.
However, to the anger of unions, even though they failed to send any representative to the original hearing, the government has been given permission to appeal to the Court of Appeal. As Usdaw general secretary John Hannett said: “These were mass redundancy situations because the businesses were closing down and it is no fault of the individual workers how small the store was that they worked in.”
In a separate development, the Northern Industrial Tribunal, in Lyttle v Bluebird UK Bidco 2 Limited [2013] NIIT 00555/12IT, has asked the European Court of Justice to rule on the meaning of “establishment”.