The Courts create confusion over redundancy law

Peninsula Team

February 11 2014

Two tribunal judgments in the past year have opened up huge debate on redundancy legislation, and have left UK employers, in effect, in a state of uncertainty. In the summer of 2013, an Employment Appeal Tribunal decision had the effect that collective redundancy consultation obligations would apply in a vastly greater number of redundancy situations than previously. The effect of the relevant legislation means that collective consultation must be carried out when 20 or more redundancies are proposed in an establishment in a period of 90 days or less. Collective consultation requirements include involving trade unions where appropriate, or if there is no trade union presence in the workplace, employee representatives that are established by holding an election, where none are already in existence. Minimum consultation periods must be adhered to before any dismissal can take effect. The focal point of the case, WW Realisation 1 v Usdaw (commonly referred to as the Woolworths case because it involved the closing down of Woolworths stores) was the definition of ‘an establishment’. ‘An establishment’ had previously widely been interpreted as one store, or one branch, or one office of the employer. So where one store was closing and resulting in redundancies, collective consultation was only triggered where 20 or more redundancies were proposed within that store. Smaller stores would therefore never trigger collective consultation. The EAT decided, in this case, that ‘an establishment’ was the employer as a whole, and not individual stores. Therefore, any large employer closing down several stores would need to consult collectively where 20 or more redundancies were proposed across the whole country within the relevant time period. Questions have now been referred to the CJEU, the European Court, to decide what the correct definition of ‘an establishment’ is and we must wait for final clarification. In the latest judgment given in the case of USA v Nolan, the Court of Appeal has refused to deny employees employed by a public administrative body the requirements of collective consultation. Although the CJEU had previously pointed out that such employees are discounted from scope of European redundancy legislation, the Court of Appeal refused to take the same stance towards domestic redundancy legislation, stating that the legisation must have been written with the deliberate decision not to discount these workers. If you need any additional information regarding redundancy please contact the Peninsula Advice Service on 0844 892 2772.

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