Collective Redundancies & Establishments

30 Apr 2015

The CJEU has today published a summary of its very important judgement in the Woolworths & Ethel Austin litigation concerning the meaning of “establishment” in the context of collective redundancies. In a nutshell the question was whether “establishment” means the particular workplace to which the employee was assigned to work or the employer as a whole?

When Woolworths and Ethel Austin became insolvent their staff were made redundant. Each store was treated as a separate autonomous unit so collective consultation only took place in stores with more than 20 employees. The consequence was that 4,443 employees from smaller Woolworths and Ethel Austin stores claimed Protective Awards for non-compliance with collective consultation procedures. The EAT upheld the claims. The case has chugged along through the higher courts for a couple of years and today we have what looks like a definitive decision from Luxembourg:

                “Where an undertaking comprises several entities, the term ‘establishment’ in the Directive on Collective Redundancies must be interpreted as referring to the entity to which the workers made redundant are assigned to carry out their duties.”

So the employees have lost their claims. In reaching this decision the Court perceived a need to ensure comparable levels of protection and significantly, costs, across the EU. Larger companies, venture capitalists and liquidators will rejoice while lawyers will welcome the creation of a fixed point in waters which still have somewhat murky eddies.  We also welcome the speed with which the court has reached it’s decision. Only the truly paranoid could possibly draw a link between the decisiveness of the Court’s action and next week’s General Election.