European ruling dismisses changes to collective redundancies

A collective sigh of relief has been heard this week as a legal ruling which would have caused significant and onerous changes to the redundancy process has been overturned by the Court of Justice of the European Union.

The case arises from when thousands of shop workers were made redundant when Woolworths plc and Ethel Austin went into liquidation and the stores where they worked closed down. Those that were members of the trade union (USDAW) claimed protective awards on the basis of the absence of collective consultation prior to the dismissal. An employer is required to collectively consult where there are 20 or more redundancy dismissals at one establishment within a 90-day period.

The Employment Tribunal ruled that there had been a failure to collectively consult, but only ruled in favour of those working in shops where 20 or more were dismissed. The union then appealed to the Employment Appeal Tribunal (EAT) who allowed the appeal. It stated that the UK law did not comply with the European Collective Redundancies Directive and the words “at one establishment” should be disregarded. It should be interpreted that a consultation is required as soon as at least 20 employees are to be made redundant within 90 days, regardless of where they work.

The Court of Appeal asked the Court of Justice of the European Union (CJEU) to review the case, which had in effect overturned UK collective redundancy consultation law and practice. THE CJEU disagreed with the EAT decision and confirmed that the original tribunal ruling was correct that collective consultation is required when 20 employees are to be made redundant at one establishment, rather than across the employer as a whole, irrespective of location.

Had CJEU not come to the conclusion it did, employees would find themselves facing more costly redundancies which would have been particularly challenging for large, multi-site employers.

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