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ECJ delivers landmark ruling in Woolworths collective consultation case

BY Heather Kemmett
Employment Law & HR
BG Purple

In March we reported that an Advocate General of the European Court of Justice had given an opinion in the long running saga of USDAW and another v. WW Realisation 1 Ltd (in liquidation) and others, commonly referred to as the Woolworths case.

The Court has now delivered its definitive judgment which, as is usually the case, followed the Advocate General’s opinion. 

The Court was asked to decide what the meaning of “establishment” is for the purposes of collective consultation where the company in question has many sites. In the UK the commonly held view was that “establishment” meant each individual site where a company operated therefore collective consultation was not required if less than twenty people were being made redundant at each site. 

The Woolworths case threw this interpretation into doubt several years ago when the UK courts decided that “establishment” should mean the whole business undertaking, regardless of how many individual sites there are. Therefore, if a company was looking at making redundancies across several sites, it had to aggregate all redundancy numbers when deciding whether to collectively consult. 

The stakes were high for employers. If they failed to collectively consult appropriately they could face awards of up to 90 days’ gross pay per employee. In the context of a national shutdown of stores this could result in hefty financial consequences. 

Since the law underpinning the case (the Trade Union and Labour Relations (Consolidation) Act 1992) is based in European law, the matter was referred to the European Court of Justice. The court has decided that the original UK interpretation was correct; each individual site can count as an “establishment” of its own when a company is deciding whether the threshold of twenty redundancies is reached. 

While the Woolworths case now has to return to the Court of Appeal to decide if this was the case in the context of those dismissals, the overall picture for UK employers is now much clearer. The judgment gives long overdue comfort to many employers who have been faced with a great deal of practical difficulty over the last five years when deciding whether collective consultation is necessary.

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