Categories
consultation redundancy

collective consultation – one establishment or many?

Woolworths

When USDAW originally took the liquidators of Woolworths to Court over the failure to consult employees before shutting down all its shops in 2008, workers in smaller branches were excluded from the award of 60 days’ pay for each employee. The reasoning behind this was that the obligation to consult on a collective basis only applies where more than 20 employees are to be made redundant at “one establishment”. The conventional interpretation of those words has been that individual sites, like factories, schools, or shops, which are managed locally, are distinct establishments. However, in USDAW and others v WW Realisation 1 Ltd the Employment Appeal Tribunal has broken with “established” tradition in taking the view that “establishment” in this context refers to a business rather than a particular location at which a business operates.

In his summary His Honour Judge McMullen QC has left in no doubt the firmness of his approach by stating that a purposive construction of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 required the court to delete the words “at one establishment”, thereby allowing protective awards to be made. USDAW has estimated that the value of the awards in this case (which was a combined hearing covering both Wooolworths and Ethel Austin) is about £5 million. With reference to the new rules which have come into force this month it is notable that the appeal very nearly never happened. It was rejected by Mr Justice Langstaff, President of the EAT on initial assessment and only allowed to proceed after a review by His Honour Judge Peter Clark.

Judges are normally very reluctant to interfere with the words contained in a statute, based on the primacy of Parliament. It is no doubt with this in mind that Judge McMullen made the following observation:

We asked Ms Rose (Dinah Rose QC for USDAW) where it was explained to parliamentarians or to the public that the Government was by reason of the Directive required to introduce the words “at one establishment”. Bereft of any evidence on this, she simply said it must be an oversight of the drafter. The words actually come from the previous version, as we have cited, but it is clear that these words do not derive from the Directive and have not been the subject of any consultation or parliamentary debate.

The practical effect of the judgment is clearly stated:

The only way to deliver the core objective of protection of the dismissed workers in the two cases on appeal is to construe establishment as meaning the retail business of each employer. This is a fact-sensitive approach which may not be the same in every case but it is consistent with the core objective as applied to the facts in these two cases…We are concerned only with the numbers dismissed…We hold that the words “at one establishment” should be deleted from section 188 as a matter of construction pursuant to our obligations to apply the Directive’s purpose.

Describing the judgment as having “wide and unwelcome implications”, The Department of Business, Innovation and Skills (which was a non-participating Respondent in the EAT) announced on 23 July that it has applied for permission to appeal against the judgment. The Government has a particular interest in the matter taking into account that, as is often the case, if the employer is insolvent, it has to pick up the tab for substantial payments towards protective awards. It seems that the Government may have thought that the case would be referred to the European Court and therefore did not bother with the EAT. It is most certainly bothered by the outcome!

Martin Malone

By Martin Malone

I'm a solicitor and the chief operating officer at Canter Levin & Berg. I was formerly head of the employment department.
I maintain this website so if you have any suggestions, criticisms or recommendations please email me at martinmalone@canter-law.co.uk.
Outside work my interests include national hunt horse racing, France and French wine and current affairs. I also design and maintain websites.