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ECJ clarifies rules on when employers must consult collectively about redundancies

David Reid
29th May 2015

Where an employer is proposing to dismiss 20 or more people at one establishment they are required by law to undertake a collective consultation process with staff. This UK law is derived from the European Collective Redundancy Directive but our domestic law differs in some important respects from the directive it is supposed to implement.

 

In 2013, in the now infamous ‘Woolworths’ case, the EAT concluded that the UK domestic legislation was incompatible with the directive and therefore the words ‘at one establishment’ in UK law had to be disregarded. This meant that in that particular case, even where fewer than 20 people were employed at a particular store, Woolworths should have collectively consulted with them. The Court of Appeal referred issues in that case to the European Court of Justice (ECJ) for clarification and the ECJ recently confirmed that the words ‘at least 20’ meant at least 20 people in each store.

 

The ECJ has now also returned its decision in a similar case. In this case, women’s clothes retailer Bon Marché ran hundreds of stores across the UK before becoming insolvent and transferring its staff to Bluebird, who then restructured and made them redundant. There were fewer than 20 staff in some of the stores and again, the question for the ECJ was whether the directive required the employer to look at the number of redundancies across all of its establishments, or simply the number per establishment.

 

In a decision containing startlingly similar terminology to the ECJ press release on the Woolworths case, the ECJ confirmed that:

  • What is or is not an ‘establishment’ is a matter for European law, and not for member of states to decide (though they could always make their own domestic laws more favourable to employees).
  • It is the entity to which the workers made redundant are assigned to work that constitutes the establishment.
  • A single store was ‘capable’ of being an establishment.

 

These recent decisions are definitely good news for larger employers. Even though they may have multiple establishments throughout the country, it is clear that the obligation to consult collectively will not arise unless there is a proposal to dismiss 20 or more staff over the relevant period at one particular establishment.

 

You can read the case here:

http://curia.europa.eu/juris/document/document.jsf?text=&docid=164261&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=157883

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