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Collective consultation: The Woolworths case 2015

Making multiple redundancies is hard for any business. This article investigates how the ‘Woolworths case’ made changes to how multiple redundancies are addressed through collective consultation because the Attorney General and the European Court of Justice have said that the Employment Appeal Tribunal’s decision on redundancies was wrong.

Multiple redundancies are being made, what must my business do?

As soon as 20 redundancies are proposed over a 90 day period, you must collectively consult with employee representatives. The problems with this usually come where you have many different sites up and down the country.

For instance, say you propose to make five redundancies at your London site. And unbeknown to you, your Nottingham site is proposing to make ten redundancies, and your Manchester site is also proposing to make another ten and this is all going to happen within 90 days.

The rules as set by the Employment Appeal Tribunal in the “Woolworths case” say that you cannot just look at what your site is doing. You need to look at what all your sites are doing and count up all the proposed redundancies over any 90 day period across the whole company.

You add all of the redundancies together to see whether you hit the 20 or more redundancies mark. In the example above you would because 25 redundancies have been proposed.

So you can see how a handful of redundancies at different sites can quickly tip you over the edge of more than 20 redundancies.

This means that under these rules you must collectively consult or risk claims against you from disgruntled employees and having to pay out the protective award (up to 90 days gross pay per employee). This can get very expensive, especially where you do not realise that other sites are making redundancies.

Practical challenges for employers

The Attorney General (the person that said the current rules are wrong) referred the Woolworths case to the European Court of Justice, who have now looked at the case and have said:

  • The current rules are wrong; and
  • An employer should only need to collectively consult with employee representative where they propose 20 or more redundancies at one particular site.

Looking back at the example above, applying this way of thinking would mean that no collective consultation at the London, Nottingham or Manchester office would be needed.

Time to crack open the champagne?

Yes, this is great news for employers but let’s not celebrate too soon.

Frustratingly, the European Court of Justice has referred the case back to the Court of Appeal. But, the Court of Appeal’s decision is likely to only be a formality.

It looks as though it is going to be a long-awaited end to the current position, and in with the more simple rules. This is actually a full circle back to what we all thought the original position was before the “Woolworths case”. It would be very unusual if the Court of Appeal does not listen to the European Court of Justice.

How can I protect my business?

In the period of limbo before the European Court of Justice ruling which came out last week, our advice was to stick with the way you have been doing things for the time being. I.e. collectively consult if more than 20 redundancies are planned over your whole business (not just at your site).

However, given the judgement, our view is that employers can now revert back the original pre-Woolworths situation. You only need to collectively consult if you propose to make redundant 20 or more employees within one establishment.

If you would like any further advice on collective consultation or any other aspect of employment law, please contact a member of our Employment & HR team for a confidential chat.

 

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