Collective Redundancies – ECJ to consider removal of the ‘establishment’ requirement

In the landmark case of USDAW and anor v Ethel Austin Ltd (in administration) and ors the EAT held that employees of Woolworths and Ethel Austin, who worked in stores where less than 20 employees were being made redundant were entitled to be consulted under the Trade Union and Labour Relations (Consolidation) Act 1992 (TURLA). They held that the words ‘at one establishment’ contained in s188 of TULRA should be disregarded when there is a collective redundancy situation involving 20 or more employees anywhere in the employers business. The EAT came to this conclusion on the basis that this accurately reflected the Collective Redundancies Directive (the Directive).

The Secretary of State appealed against this decision to the Court of Appeal and requested a stay of proceedings pending the outcome of Lyttle v Bluebird UK Bidco Ltd, a Northern Ireland case with similar facts, which had been referred to the ECJ. The claimants argued it should instead also be referred to the ECJ so that they can join the decision with the Lyttle case.

The Court of Appeal agreed with the claimants. They refused to stay proceedings and made a reference to the ECJ to clarify whether the collective redundancy consultation requirements under the Directive only applied where 20 or more employees were being made redundant at the same establishment. They did this for two reasons. Firstly, the claimants in the Lyttle case were not legally represented and the Court of Appeal felt that it would be better for the ECJ to have a legally represented party arguing the case for the employees. This was especially so given that the judgment could have far reaching consequences as many Member States may have implemented the Directive in the same way that the UK has. Secondly, the Court of Appeal said that the Lyttle case would not resolve all of the issues arising out of the Woolworths case which would mean that a further reference may have to be made in the future.

Moreover, the Court of Appeal found that if the ECJ ruled that the UK had not properly implemented the Directive then the question would be raised as to whether the claimants can rely on vertical direct effect of the Directive to seek a remedy against the Secretary of State. This question was not part of the Lyttle case and so was also referred by the Court of Appeal.

The EAT’s decision in the Woolworth’s case has far reaching consequences for employers. Suddenly it appears steps taken by employers to minimise the need for collective redundancy consultations are no longer adequate.  The decision of the ECJ is eagerly anticipated.

For more information, please contact the Employment Team

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