• Tar Tumber
  • 31 January 2014

Establishing your rights

There seems very much a ‘Ping-Pong’ effect going on between the Government and USDAW when it comes to the definition of ‘establishments’ within collective redundancy consultation requirements.

Historically, collective consultation requirements would only kick in once 20 or more staff based on one establishment (i.e. site) were at risk of redundancy. This remained the case following the Woolworths insolvency in 2008 when thousands of employees working in shops with fewer than 20 staff missed out on collective consultation and at Employment Tribunal, were denied any protective awards for this as it was deemed each shop was an establishment and therefore collective consultation did not apply.

However, in May 2013, USDAW went to Employment Appeal Tribunal on behalf of these workers. The EAT decided that the reference to “establishment” in the UK legislation is incompatible with the European directive, and the “establishment” in this case, was the whole of Woolworths’ UK business. 

The Government has appealed this to the Court of Appeal, who in turn referred the case for a definitive answer to the Court of Justice of the European Union (CJEU) on 22 January 2014.

Until there is a definitive answer, there remains a headache for any multi-site business, as is often the case within the FM sector, which has previously treated each site as a separate establishment for the purposes of redundancy consultation and manages each site locally with no overall strategies to ensure representation or consultation across the wider organisation.

If the CJEU denies the Government appeal, there will be clarity in this area once and for all. However, it will also mean that organisations will have to swiftly adopt systems for the central monitoring of any restructuring proposals, and assess the number of employees potentially affected, in order to reduce the risk of successful claims for protective awards (of up to 90 days’ uncapped pay per employee). Furthermore, they will need to ensure where 20 or more redundancies are likely across the whole business, the minimum consultation requirement in each case will be 30 days. 

Systems will also be required to ensure employee representation requirements are met, including electing employee representatives where appropriate union or other representatives are already not in place.

Clearly, if the Government wins its appeal, the old meaning of ‘establishment’ will be resumed and organisations will be able to go back to the ‘good old days’ of local management. 

In the meantime, companies may play it safe and look at overall numbers across the whole business when restructuring to ensure the new consultation requirements are adhered to; or they may choose to ignore the new definition of ‘establishment’ and keep their fingers crossed that no one will raise a claim.

We watch this space though as these things take time - we could be here for a while.