The EAT has issued a judgment which turns UK collective redundancy law on its head. The EAT's decision in USDAW and others v WW Realisation and USDAW v Ethel Austin has rewritten statute, making the duty to collectively consult far more wide-reaching.
The UK statute (the Trade Union and Labour Relations (Consolidation) Act 1992) states that an employer is only required to collectively consult employees when it proposes to make 20 more redundancies "at one establishment" within a period of 90 days or less.
The case concerned the collapse of Woolworth's and the redundancy of its entire workforce. In the Employment Tribunal at the first instance, it was held that each Woolworth's store was a separate establishment, and that therefore in smaller stores (with fewer than 20 employees) there was no duty to collectively consult employees.
However, on appeal, the Claimants' union successfully argued that the wording "in one establishment" should be removed from the statute. The EAT held that this wording was incompatible with the EU Directive, which lays out the collective redundancy rules for EU member states, and should therefore be "disregarded."
This decision is of great significance for all businesses with more than one site. Multi-site businesses, who have previously found it comparatively easy to separate out redundancy programs so that they would not be caught by the collective consultation rules, will now find the regulations biting more often.
There is also a new risk for businesses where different sites are operationally independent. Previously, these sites may have run self-contained redundancy programs without coordinating with other parts of the business. Businesses will now need to ensure that redundancy programs are centralized to avoid accidentally reaching 20 proposed redundancies across different sites. Employers will still be able to avoid the regulations applying, but only with careful time planning to ensure that no proposed redundancies fall within any given 90 day period.
For employers who have already begun a redundancy program across different sites, the change will bring even greater difficulties. They will need to consider extending the consultation and delaying some or all of the planned redundancies if they wish to avoid penalties.
Employers who have already made multi-site redundancies within the past 3 months, without collectively consulting, may now face claims for failure to consult of up to 90 days' pay per employee. Businesses in this situation may want to apply to the Tribunal for a stay of the claim against them, since BIS and the Secretary of State have just applied for permission to appeal against this decision.
Although it is widely agreed that the EAT has exceeded its powers by re-writing the statute, the new rules must be complied with, at least until the Woolworths appeal – or the referral of the Bonmarche case to the CJEU on similar facts – is decided by the European courts.
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