When the retail giants Woolworths and Ethel Austin went into administration thousands of employees lost their jobs due to redundancy. Under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), this triggered a duty for the employer to carry out collective consultation with the recognised union or if none, the employee representatives. The speed of the collapse was so great though this was never done. USDAW and the other representative bodies brought claims for ‘protective awards’ i.e. compensation payments for the failure to consult. Generally these claims were not contested and awards were made for up to 90 days for redundant employees. However there were around 3,200 former employees of Woolworths and 1,200 former employees of Ethel Austin who did not qualify for the awards because they worked in stores with fewer than 20 employees.
TULRCA provided that there had to be at least 20 proposed dismissals at one establishment for the consultation duties to be triggered. This automatically excluded the smaller stores where fewer were employed.
USDAW appealed. It argued that TULRCA referring to a single establishment was not compliant with the European law that it was meant to enforce. They argued the duty to collectively consult should apply wherever one employer proposed to make 20 or more employees redundant regardless of where they were based. In a shock decision the Employment Appeal Tribunal held that the reference to one establishment should be disregarded when considering when collective consultation should be carried out. This meant in practice multi-site employers would have to carry out formal consultation with appropriate representatives in many more situations than they had previously.
The case was appealed to the Court of Appeal which referred the question to the European Court of Justice. The European Court heard the case on Thursday 20 November 2014 in a combined hearing with the similar cases of Lyttle from Northern Ireland and Rabal from Spain.
The Advocate General gave his opinion in the case today. His view was that underlying the statutory duty to carry out collective consultation was the need to protect local communities from the impact of collective redundancies. This clearly indicates that the UK law should retain the reference to redundancies being at an establishment or ‘local employment unit’.
This is not the final decision but a preliminary indication of what the outcome might be. The opinion will be taken into account by the five Judges who sat in the hearing. Usually the Judges follow the Advocate General’s opinion but not always. The Judges can and sometimes do reach a different conclusion. However if the Judges, as we expect, do reach the same conclusions then it will be good news for employers and administrators having to make cut backs as it would seem inevitable that the final result will be that the trigger for collective consultation will once again only apply where there are 20 or more redundancies at an establishment and the whole organisation will not need to be considered.
This is likely to have a big impact on the large scale redundancies that have happened since this case first hit the headlines and many former workers of other well-known firms that have disappeared from the High Street such as Comet, Jessops, and Phones-4-You may now miss out on compensation.