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September 15, 2015

If an employer plans to dismiss 20 or more employees at 'one establishment' within 90 days, they must inform and consult with the employees' representatives (e.g. a trade union).


Employers have always been advised that 'one establishment' means the site where the employees work and not the whole business. This made it possible to carry out large-scale redundancies without entering the consultation process by limiting the number of redundancies in each of the employer's sites to fewer than 20 people.


This practice was banned in 2013 following the judgment of the Employment Appeal Tribunal (EAT), which prompted the government to appeal. This case will now be brought to the European Court of Justice (ECJ). The ECJ usually follows the opinion of the Advocate General, who recently gave his opinion on the case.


Case: USDAW v Ethel Austin Ltd and another 


Woolworths and Ethel Austin went into administration in 2008 and in 2010, respectively.

Both companies had a number of shop stores that employed fewer than 20 people. Therefore, during the redundancy process the employers consulted only with individual employees rather than with their trade union USDAW. USDAW complained that the companies should have informed and consulted them first.

The EAT decided that it was necessary to remove the words 'one establishment' when dealing with collective redundancies. This meant that employers must now enter consultations with representatives if they're planning to make 20 or more employees redundant within 90 days across the whole of the employer's business.


However, the Advocate General said that the original position of UK law was appropriate, and he didn't agree with the EAT's decision. He stated that when a business makes a number of redundancies at 'one establishment', this should be interpreted as the 'local employment unit' in which the employees are based, rather than combining all the proposed redundancies across the entire business. Therefore, he said consultations aren't necessary if proposing to make fewer than 20 employees at an establishment.

He also advised that it's for the national courts to determine what an 'establishment' is in each situation, as it'll depend on the facts of each individual case. For example, an employer operating several stores in one shopping centre could be regarded as forming a single employment unit.

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