Employees in establishments where there are 20 or more employees proposed as redundant are entitled to collective consultation for minimum periods under the Trade Union and Labour Relations Act 1992.
When Woolworths collapsed in 2008, as with so many insolvency situations, employees were not consulted collectively. It was not in dispute that those in stores where 20 or more people were employed would be able to make a claim for a protective award for failure to consult, which could, in turn, be recovered at least in part from the Insolvency Service (the Secretary of State).
The issue was that there were around 3,200 employees who worked in stores with fewer than 20 employees, who received nothing. How could it be right that those employees received nothing while their counterparts in larger stores did?
This was the question running throughout the Woolworths/Ethel Austin litigation, which has finally reached, as the employees’ union leader has said, “the end of the road.”
In 2013, the Employment Appeal Tribunal held that to give effect to the background European Directive, the words “at one establishment” should be treated as deleted from the statutory provision. The effect was that all employees where there was an employer with more than 20 employees, would be entitledd to collective consultation over redundancy.
The Court of Appeal referred this issue to the European Court of Justice who has ruled that there is no requirement to treat those words as deleted from the statute. The original position was correct and required no amendment.
While it’s obviously bad news for those affected employees who might be forgiven for wondering why their colleagues received an apparent windfall of 60 days pay while they did not, the reasoning is set out well in the Advocate General’s opinion which preceded the decision. He pointed out that the protection in the measure is about looking at the socioeconomic effects of mass redundancies in given local contexts, rather than providing a maximum level of protection to all individuals. “It’s precisely the local community which may wither and fade away without protection from collective redundancies.” In other words, it’s the fact of being in a large employer in a local community which entitles you to consultation, and the entitlement is for a wider purpose than the protection of individual rights.
It’s an interesting analysis, but one which seems increasingly old fashioned in a world where people are not working in large local factories, but in atomised, increasingly disparate arrangements. The EU has recently announced a consultation with social partners about the consolidation of the existing employee consultation directives; but how far it would modernise those requirements is hard to say at this point.
Partner, Workwise Legal LLP