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Case law Duty of employers to consult on collective redundancies

Employers must only consult with employees at a particular 'establishment' when proposing to make 20 or more redundancies (a 'collective redundancy') if there are 20 or more employees there, according to an Opinion of the Advocate General of the European Court of Justice.

Legal Alert

This update was published in Legal Alert - March 2015

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

Please note: A newer article on this case was published in the June 2015 edition of Legal Alert following subsequent developments in the legal process.

An EU Directive requires employers to consult with employees when proposing to make more than 20 of them redundant within a set period. However, the wording of the UK law implementing the Directive has led to uncertainty over whether there is an obligation to consult when it is proposed to make 20 or more employees redundant in all - but the employer has more than one 'establishment' and there are fewer than 20 employees at each establishment. Employment Tribunals have previously decided that consultation at a particular establishment is only triggered where 20 or more employees are made redundant at that establishment. If there are fewer than 20 employees at an establishment they do not need to be consulted.

However, in a recent case the EAT ruled that UK law was inconsistent with the Directive, and ruled that provided 20 or more employees are made redundant in all, the employer must consult. It does not matter if there are fewer than 20 employees at a particular establishment.

The UK referred the matter to the European Court of Justice (ECJ) and the Advocate General of the ECJ has given his preliminary opinion on this case (and two similar cases from other EU states). He has said that an 'establishment' means a 'local employment unit', the meaning of which is to be determined by individual member states, dependent on the facts of each specific case. However, he commented on the importance of protecting employees if a large number of employees were to be dismissed in the same local area, depending on the impact this might have on the local community and the (limited) number of jobs in that location. This implies that member states should consider geographical limitations when deciding what amounts to a local employment unit.

Overall, he said the UK government had correctly implemented the EU Directive as its interpretation of 'establishment' was consistent with it.

The ECJ does not have to follow an opinion from the Advocate General, but usually it does. If his opinion is followed by the ECJ, this will mean employers do not have to consult with employees at a particular establishment if there are fewer than 20 of them there.

Operative date

  • Now

Recommendations

  • Employers making 20 or more employees redundant where there are fewer than 20 of them at a particular establishment, and who do not wish to enter into consultations, may wish to defer their plans pending the ECJ decision.
Case ref: USDAW B. Wilson v WW Realisation 1 Ltd, in liquidation, Ethel Austin Ltd, Secretary of State for Business, Innovation and Skills Case C-80/14

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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