Advocate General's advice on 'Woolworths' case: What it means for employers?

11th May, 2015

According to EU directive 98/59, If an employer plans to dismiss 20 or more employees at 'one establishment' within a 90 day period, they must inform and consult with the employees' representatives (e.g. a trade union).

The question on every employers lips is "what does one establishment mean?". Employers have always been advised that it is the site where the employees work and not the whole business. This made it possible to carry out large-scale redundancies without involving representatives by limiting the number of redundancies in each of the employer's sites to below the 20 people threshold.

This practice was banned in 2013 following the judgment of the Employment Appeal Tribunal (EAT), which subsequently prompted the UK government to appeal. This case will now be brought in front of the European Court of Justice (ECJ). The Advocate General gave his advice on the situation, deemed an important event as the ECJ usually follows the opinion of the Advocate General.

USDAW v Ethel Austin Ltd and another

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

Both companies had a number of shop stores that employed fewer than 20 people. 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 argument arose from the understanding of the term 'one establishment', was this one store? Or the company as a whole?

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 employers' business.

The Advocate General's Opinion

The Advocate General stated that the original position of UK law was appropriate, and he did not 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' where the employees are based, rather than combining the redundancies across the entire business. He said consultations aren't necessary if proposing to make fewer than 20 employees at a single establishment.

He also advised that it is for the UK courts to determine what an 'establishment' is in each situation, as it all depends 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. Alternatively if employees constantly travel to multiple stores, the courts would have to interpret how this would effect each locations quota.

What this means for employers?

Employers will find this opinion favorable as the ECJ usually follows the advice of the Advocate General. It should be noted, however, that this is only his opinion and therefore not binding. Employers must wait for the ECJ's ruling decision later this year before evaluating their redundancy policies. If currently in the process of making mass redundancies, the best course of action is to seek professional legal advice.