Collective Redundancy Consultation - Meaning of 'Establishment'

Under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992, employers have a duty to consult with appropriate representatives of employees concerning forthcoming redundancies if 20 or more employees are to be dismissed at one establishment within a 90-day period. Failure to do so can lead to a protective award requiring the employer to pay each affected employee 90 days' pay.

In May 2013, in a decision involving the protective awards payable to employees made redundant by retail chains Woolworths and Ethel Austin, the Employment Appeal Tribunal (EAT) ruled that the words 'at one establishment' should be deleted from the Act, in order to give effect to EU Council Directive 98/59EC, which it is intended to implement, and protective awards were payable to former employees who had worked at stores with fewer than 20 members of staff (USDAW and Another v Unite the Union and Others).

The effect of the ruling would be that the duty to consult would be triggered when 20 or more employees were to be dismissed as redundant from a business as a whole, irrespective of the number of people employed in each individual workplace.

The employers appealed to the Court of Appeal, which in turn sought the opinion of the Court of Justice of the European Union (CJEU). The case is being dealt with in parallel with one referred by the Industrial Tribunal of Northern Ireland and one from the Spanish courts.

The questions asked by the Court of Appeal were:

• Does the phrase 'at least 20' refer to the number of dismissals across all of the employer's establishments in which dismissals are effected within a 90-day period, or does it refer to the number of dismissals in each individual establishment?
• If it refers to each establishment, what is the meaning of 'establishment'? In particular, should 'establishment' be construed to mean the whole of the relevant retail business, being a single economic business unit, or such part of that business as is contemplating making redundancies, rather than a unit to which a worker is assigned their duties, such as each individual store?

The Advocate General has now published his opinion, which is that the Directive does not require – nor does it preclude – aggregating the number of dismissals in all the employer's establishments for the purposes of verifying whether the '20 person' threshold has been met. Furthermore, the term 'establishment' denotes the unit to which the workers made redundant are assigned to carry out their duties, which it is for the national court to determine.

Member states may decide to increase the level of protection afforded to workers when there are to be collective redundancies, provided that this would, on every occasion, be more favourable to the workers. It is for the national courts to verify that this is the case.