Section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) provides that where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less the employer has to collectively consult with appropriate representatives of the employees who may be affected. The statutory provisions following section 188(1) of TULR(C)A go on to set out the collective consultation obligations.
It has never been entirely clear what is meant by establishment and whether the UK Government correctly implemented the EU Collective Redundancies Directive through the provisions of s188(1) of TULR(C)A, not least because the relevant provision in the EU Collective Redundancies Directive refers to establishments rather than one establishment. The issue is of huge importance to employers with multi site operations in the UK as a failure to properly comply with the statutory collective consultation obligations can result in protective awards being made of up to 90 days pay per affected employee.
Nick and Sophie have kept you up to date on the decision in USDAW v Woolworths case in which the EAT held that there should be a purposive construction of section 188(1) of TULR(C)A so that the words "at one establishment" are deleted. That decision has significant implications for all employers with multi-site operations when considering redundancies. The numbers of redundancies proposed across the whole organisation will need to be totalled to see if the statutory collective consultation obligations apply rather than considering the numbers at individual sites, which will no longer be considered as separate establishments.
In the Northern Irish case of Lyttle and others v Bluebird UK Bidco 2 Limited [2013] Bonmarche, a woman's clothing chain, closed a number of stores in Northern Ireland, each with fewer than 20 employees. In total 105 employees were made redundant. The employees brought claims for unfair dismissal and a protective award for failing to consult over collective redundancies. Rather than seeking, as the EAT did in USDAW v Woolworths, to re-write TULR(C)A as the Judge thought it should be written to comply with the EU Collective Redundancies Directive, the Northern Irish Industrial Tribunal referred a number of questions to European Court of Justice which can be summarised as follows:
1. 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?
2. 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?
3. 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?
It will undoubtedly take some time for the European Court of Justice to rule on the matter but its decision should provide definitive guidance to HR practitioners and lawyers alike on the establishment test for the purposes of collective redundancy consultation.