Collective redundancy uncertainty continues for employers ahead of first EU ruling, says expert

The English Court of Appeal referred the case to the Court of Justice of the European Union (CJEU), which has been asked to look at whether the redundancy regime that applies when making job cuts should depend on the number of affected people employed by the company as a wholeor on the number of employees per site. One of the CJEU's advocates general will publish an opinion on Thursday which, although not binding on the court, is likely to be followed, said Ed Goodwyn of Pinsent Masons, the law firm behind Out-Law.com.

"Redundancy consultations involving fewer than 20 people are typically more streamlined, as the rules are different to those where large groups are concerned as there is no obligation to engage in 30 or 45 day collective consultation," he said. "For argument's sake, if you were a retailer you could legitimately cut 19 staff at one site with the minimum of red tape."

"However, under the new rules since the EAT's decision in the Woolworths case, a problem arises where a chain of retailers were to make job losses across a number of its establishments. Instead of treating each store individually, employers would have to count all the employees at risk of redundancy across all their stores and if this larger group amounts to 20 or more employees, collective consultation is triggered," he said.

Although most employers had adapted to the change brought about by the EAT's ruling, UK employment law was currently in the "unfortunate situation" where it was not clear whether the old or new rules would eventually apply, Goodwyn said.

"On one hand, the current legal position means more consultation, more process and, typically, more time and cost," he said. "However, anything that departs from the current status quo means more change and further uncertainty at a time when large swathes of employment law are in a state of flux."

"For businesses operating across multiple sites, such as retailers, a significant investment of time and money was made to ensure visibility of dismissals across the business which might not always have been instantly apparent. This has been a major headache for HR directors and, particularly as we see significant restructuring programmes being rolled out among many supermarket chains, the continued uncertainty is unhelpful. There is scope for employers to be in a perpetual cycle of consultation as individual redundancies implemented across the business are aggregated together," he said.

Collective redundancies are those where an employer proposes making 20 or more employees redundant within a 90-day period. The EU's Collective Redundancy Directive, which is given effect to in the UK under the Trade Union and Labour Relations (Consolidation) Act, requires that employers consult on proposals for collective redundancies with unions or representatives of the affected employees for at least 30 days before they can make any redundancies, or for at least 45 days where more than 100 employees are affected.

The difficulty that arose in the Woolworths case was caused by the addition, in the UK's version of the rules, of the limitation that the proposed redundancies must be "at one establishment" before the consultation requirement arises. In 2013, trade union USDAW won a case on behalf of over 3,000 former Woolworths employees and over 1,200 former Ethel Austin employees who worked at smaller stores and were not consulted before being made redundant. The case has now been appealed by the liquidators of the two insolvent chains, with the UK government intervening.

The advocate general and, ultimately, the CJEU will also consider a separate referral by the Northern Ireland Industrial Tribunals as part of Thursday's opinion. The tribunal has also asked the CJEU to clarify the meaning of "establishment", this time in relation to an alternative threshold set out in the EU directive, in the context of a case involving women's clothing chain Bonmarche.