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Woolworths - Advocate General Recommendations delivered

At the start of February, the Advocate General delivered his recommendations in relation to the case of thousands of former Woolworths and Ethel Austin employees who were made redundant, but missed out on millions of pounds in compensation due to the size of store they worked in.

The Advocate General’s legal opinion that UK law and the interpretation of the European Collective Redundancy Directive are compatible, was a surprise and could have far-reaching implications for how businesses conduct collective redundancy.

The recommendations mean that employers are now closer to previous and less costly collective redundancy rules whereby they do not have to automatically consult with staff in a particular establishment if there are fewer than 20 employees.

The role of the Advocate General is to provide an official opinion on the cases before the European Court makes definitive rulings. The Court is not obliged to accept opinions, but many choose to do so.

Whilst some of the Advocate General’s findings were unexpected, they will be met with a huge sigh of relief from many employers as the outcome is essentially good news for UK businesses. This of course depends on whether the European Court follows his opinion that UK law as previously interpreted pre Woolworths is compatible with the Directive, but we would be very surprised if it wasn’t followed by the Court.

If the recommendations are followed, this will mean that in most cases, businesses will not have to aggregate all proposed redundancies taking place within 90 days to determine if the threshold is met.

The case is focused on former employees at Woolworths and Ethel Austin who lost their jobs in 2008 and 2010 respectively but were not collectively consulted by the Administrators.

Unions acting on behalf of the affected staff brought claims in the Employment Tribunal for protective awards. However, over 3,000 staff who worked at smaller Woolworths stores and 1,200 former employees of Ethel Austin did not receive these awards at the initial Employment Tribunal in 2010, whilst former employees who worked in larger shops did.

This was because the Tribunal decided each individual store counted as one ‘establishment’ for the purposes of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).  This states that: “Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment, within a period of 90 days or less, the employer shall consult about the dismissals (with) appropriate representatives... of the employees...”

The USDAW union appealed to the Employment Appeal Tribunal (EAT) on the basis that this approach to working out what is an establishment is contrary to the Collective Redundancies Directive. The appeal was successful and the EAT ruled in 2013 that the words ‘at one establishment’ must be disregarded for the purposes of any collective redundancy involving 20 or more employees. Compensation totalling millions of pounds was awarded to staff working in smaller stores who had not been consulted with over their redundancy.

The case was then heard last November by the Court of Appeal and the matter was referred straight to the Court of Justice of the European Union.

In his recent recommendations, the Advocate General said employers should be able to treat each site as distinct in situations where they are proposing to make fewer than 20 dismissals. However, if an employer is treating different sites as distinct establishments, they still need to comply with existing case law to show that they are actually separate and have, for example, autonomous management.

Thousands of employees, trade unions and their members affected by the case will be hugely disappointed as the chances are, they will lose their claims for compensation if, as expected, the European court follows the Advocate General’s opinion.

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