In one of the biggest changes to redundancy law in recent years the case of USDAW v Woolworths has changed the way employers will need to undertake collective redundancy consultation.
Before the Woolworths Judgment the established law was that employers only needed to consult with trade union or employee representatives for a minimum of 30 days if they were proposing to make 20 or more employees redundant “at one establishment” within a 90 day period.
When Woolworths became insolvent each store was treated as “one establishment”, as has been accepted practice in the UK for many years. As a result, Woolworths understandably thought that collective consultation was only required at the bigger stores which employed more than 20 employees and their head office.
The Employment Appeal Tribunal (EAT) has held that this type of consultation does not reflect what the relevant EU Directive requires (which does not refer to single establishments in this context). The EAT decided that in order for the relevant UK legislation to reflect EU law the words “at one establishment” should be deleted so that there is now an obligation imposed on employers to consult collectively whenever an employer proposes to dismiss 20+ employees within 90 days on grounds of redundancy, irrespective of the number of “establishments”.
The result of the case is that all the employees from the smaller stores became entitled to a protective award which can be anything up to 90 days’ gross pay for each employee. Clearly this can be a huge amount of money. According to the EAT, the employer in this case should have consulted with representatives of all employees, not just those at the larger stores.
Subject to any appeal in this case or new legislation, in future there will be no ability for an employer to ‘opt-out’ of collective consultation by scattering their employees throughout different establishments around the UK. Any employers currently comtemplating redundancies across different sites should immediately review their proposals and seek advice on collective consultation obligations.
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