11 February 2015

Collective redundancy consultation and the Woolworths case: relief for employers?

The European Court has been accused of wrapping employers up in ever more red tape. But this week’s opinion from the Advocate General of the European Court of Justice (“ECJ”) in the Woolworths case could be an exception, if it is followed in the court’s final ruling.

The demise of the Woolworths chain during the depths of the credit crunch hit the headlines for many reasons. One such was the shock to employment practitioners of an Employment Appeals Tribunal (“EAT”) ruling in the context of the redundancies at Woolworths stores. The EAT ruled that UK legislation and long-established practice were wrong regarding a significant aspect of redundancy practice: namely, the trigger point for collective redundancy consultation. In 2013, the EAT stated that all employees of the same employer who faced redundancy within a 90-day period should be counted: if there were 20 or more employees at risk, collective consultation was required. The UK legislation - which clearly stated that only employees at individual local establishments needed to be counted - was wrong under EU law, the EAT said.

The upshot of the 2013 EAT decision threatened hundreds of compensation claims and an increased burden on employers, as the EAT ruling meant collective consultation would be triggered more frequently. Collective consultation introduces delays of between 30 and 45 days to any redundancy exercise, and takes up significant management time, when employers in such circumstances are already under pressure.

A number of combined appeals on the same point have now reached the ECJ and the Advocate General has given his opinion that EU law does not in fact require this change to UK law.

Good news for employers? It remains to be seen whether the ECJ will confirm this opinion, which is non-binding at this stage. If so, this will be a welcome relief to employers, particularly multi-site employers such as retailers who might otherwise be faced with many more collective consultation exercises, across widespread sites and for diverse reasons.

Given the significance of this case, we await the ECJ’s final decision with interest. We will keep you posted.

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