With all the focus on the Woolies case it is easy to forget the Northern Irish Bonmarche case that first made the referral to the European Court of Justice (ECJ) on the meaning of "establishment"
With all the focus on the Woolies case it is easy to forget the Northern Irish Bonmarche case that first made the referral to the European Court of Justice (ECJ) on the meaning of "establishment" under the EU Collective Redundancies Directive. Earlier this week the ECJ answered the three questions posed giving an even clearer steer that an individual store can be a discrete establishment.
The Northern Irish Industrial Tribunal asked the ECJ:
1. Does establishment mean the local work unit to which the employees were assigned for the purposes of carrying out their work i.e. the individual site?
Each store was treated as an ‘individual cost centre’, whose budget was decided on by the head office in Great Britain. It was also the head office that decided on the stock and the sales promotion priorities of each store, and that provided or organised the provision of the articles offered for sale. Nevertheless, each branch manager could influence the amounts and types of goods provided. The store managers were responsible for achieving the objectives of their respective stores. Within the limits of the budgetary provision allocated to staffing hours, which was decided on centrally, the branch manager had discretion as to the number of full-time and part-time staff who would be employed. On this basis the ECJ considered that each store is capable of being an establishment but ultimately this was a matter for the Northern Irish Industrial Tribunal to establish.
2. If not, can an establishment be constituted by a sub unit of an undertaking which consists of or includes more than one local unit i.e. can an establishment be a group of individual sites, for example all the stores in the Northern Ireland region?
The ECJ answered this question in the answer to the first question.
3. Does the collective consultation threshold of at least 20 employees refer to the number of dismissals across all of the employer’s establishments, or is it the number of dismissals per establishment?
The ECJ held the definition in Article 1(1)(a)(i) and (a)(ii) of the EU Collective Redundancies Directive requires that the dismissals effected in each establishment should be considered separately.
While in this case and the Woolies case the ECJ has left it for the local Court / Tribunal to determine whether individual stores are separate establishments for the purposes of collective redundancy consultation, the judgment clearly suggests that a store-based approach to calculating thresholds for collective redundancy consultation is permissible. These decisions give helpful clarification to both lawyers and HR advisers alike. However, the question of whether a store or site is a separate establishment is fact sensitive and advice should be sought before embarking on a redundancy exercise across multiple sites.
The Northern Irish Industrial Tribunal asked the ECJ:
1. Does establishment mean the local work unit to which the employees were assigned for the purposes of carrying out their work i.e. the individual site?
Each store was treated as an ‘individual cost centre’, whose budget was decided on by the head office in Great Britain. It was also the head office that decided on the stock and the sales promotion priorities of each store, and that provided or organised the provision of the articles offered for sale. Nevertheless, each branch manager could influence the amounts and types of goods provided. The store managers were responsible for achieving the objectives of their respective stores. Within the limits of the budgetary provision allocated to staffing hours, which was decided on centrally, the branch manager had discretion as to the number of full-time and part-time staff who would be employed. On this basis the ECJ considered that each store is capable of being an establishment but ultimately this was a matter for the Northern Irish Industrial Tribunal to establish.
2. If not, can an establishment be constituted by a sub unit of an undertaking which consists of or includes more than one local unit i.e. can an establishment be a group of individual sites, for example all the stores in the Northern Ireland region?
The ECJ answered this question in the answer to the first question.
3. Does the collective consultation threshold of at least 20 employees refer to the number of dismissals across all of the employer’s establishments, or is it the number of dismissals per establishment?
The ECJ held the definition in Article 1(1)(a)(i) and (a)(ii) of the EU Collective Redundancies Directive requires that the dismissals effected in each establishment should be considered separately.
While in this case and the Woolies case the ECJ has left it for the local Court / Tribunal to determine whether individual stores are separate establishments for the purposes of collective redundancy consultation, the judgment clearly suggests that a store-based approach to calculating thresholds for collective redundancy consultation is permissible. These decisions give helpful clarification to both lawyers and HR advisers alike. However, the question of whether a store or site is a separate establishment is fact sensitive and advice should be sought before embarking on a redundancy exercise across multiple sites.