Collective redundancies – what is an establishment?

9 February, 2015
by: Cripps Pemberton Greenish

Under UK law, an employer must inform and consult with employee representatives when they propose to make 20 or more employees redundant at one establishment. Failure to do so can lead to an award of 90 day’ pay being made to each affected employee (a protective award).

It is the meaning of ‘at one establishment’ that is under review by the courts. When Woolworths closed over 25,000 employees were made redundant, but those employees who worked at the smaller stores with less than 20 employees were not able to claim a protective award. The EAT held that ‘at one establishment’ should be removed from the legislation. This has left employers proposing to make 20 or more redundancies at a number of sites across the UK in uncertainty. Do they have to collectively consult even where there is no geographic or business connection between the redundancies?

The matter has now gone to the European Court (ECJ). The first part of this process is for the Advocate General to make a non-binding recommendation. The Advocate General has just recommended that when considering the number of employees an employer proposes to make redundant, one should look at the unit to which the employees are assigned. In the Woolworths case, this would be the store where the employees worked, meaning those employees who worked at the smaller stores are not entitled to a protective award.

This decision is not binding. We will have to wait for the ECJ decision. It does however suggest that this part of employment law is moving in favour of employers.