Consultation and ‘Establishments’

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The Problem

A number of employers may read with some alarm the outcome of an EAT decision involving the union USDAW and former employees of Woolworths (USDAW and others v WW Realisation 1 Ltd (in Liquidation) and another). The problem relates to when collective consultation is triggered – is it triggered if 20 or more redundancies are proposed within a 90 day period if the redundancies are across multiple sites?

The Principle

The law as we knew it was that collective consultation was only triggered if 20 or more redundancies were proposed at a single establishment. This means 10 redundancies at two distinct sites of the same employer would not normally trigger collective consultation; each site being regarded as a single establishment. However, the result of this case is to effectively remove the words ‘one establishment’ from the legislation meaning collective consultation will be triggered if 20 or more redundancies are proposed in a 90 day period – full stop. The EAT has held that there is no ability for an employer to ‘opt-out’ of collective consultation by scattering its employees across multiple sites.

The Practice

The impact this has on employers is significant. We don’t yet know if there will be an appeal but this judgment will mean if 20+ redundancies are proposed in 90 days across the whole employer then collective consultation will be triggered making redundancy exercises more complex and procedurally challenging.

In practical terms, employers with multiple sites will need to ensure they communicate to each other about their redundancy programmes and keep a tally of dismissals if they are to avoid protective award claims which arise from failing to inform and consult.

This decision undoes largely the beneficial changes for employers introduced in April to try and simplify collective consultation obligations.  The issue is likely to run and run and we will update you further as it progresses.

For more information, help or advice please contact Tim Davies on 0191 211 7927.