In Usdaw v Ethel Austin Ltd (in administration) and another case the EAT has held that the words ‘at one establishment’ in S.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 must be deleted to ensure compliance with the EU Collective Redundancies Directive (No.98/59). The duty to consult over collective redundancies is therefore triggered where an employer is proposing to dismiss at least 20 employees as redundant within 90 days, irrespective of where those employees work. Thus, on the facts of the case, where thousands of employees were made redundant at hundreds of separate retail stores nationwide, all employees, including those working in stores where fewer than 20 redundancies took place, were entitled to protective awards for breach of the TULR(C)A.
The liquidation of retail chains Woolworths and Ethel Austin in 2008 and 2010 resulted in the loss of several thousand jobs. The recognised trade unions brought claims before employment tribunals that the administrators failed to comply with their duty under S.188 TULR(C)A, which states that an employer ‘proposing to dismiss as redundant 20 or more employees at one establishment’ within a 90-day period must consult about the dismissals with the appropriate employee representatives. The tribunals found that there had been a failure to comply with the duty to consult but, treating each individual store as a discrete ‘establishment’ for the purposes of S.188, decided that there was no duty on the administrators to consult on redundancies at any store with fewer than 20 employees. Accordingly, the tribunals only made protective awards under S.189 TULR(C)A where 20 or more employees were dismissed at one store. This meant that around 4,400 workers – 1,210 at Ethel Austin and 3,233 at Woolworths – did not receive protective awards. The unions appealed to the EAT, arguing that this construction of S.188 was contrary to the Directive’s objective of protecting workers’ rights on redundancy.
The EAT, hearing the appeals in both cases together, agreed that the starting point to the issue on appeal was Article 1 of the Directive, from which the duty to consult over collective redundancies is derived. This Article gave Member States a choice, upon transposing the Directive, as to when the duty to consult will be triggered under domestic law. The first option, in Article 1(1)(a)(i), looked to the size of the existing workforce and the establishments in which employees worked. The second, in Article 1(1)(a)(ii), was much simpler in that it required an employer to consult collectively where, over a period of 90 days, the number of redundancies was ‘at least 20, whatever the number of workers normally employed in the establishments in question’. The second option was chosen by the United Kingdom when it transposed the Directive into domestic law.
According to the EAT, it was clear from ECJ case law that the term ‘establishment’ could be given a broad or a narrow construction, but it had to give effect to the Directive’s core objective of improving workers’ rights. While the meaning of the term is critical for determining whether the duty to consult is triggered under option (i), there is no need to construe the term in any particular way for the second option because the duty under (ii) applies ‘whatever’ establishments the employees work in. In imposing a site-based restriction on the number of redundancies proposed which can trigger the duty to consult, S.188 TULR(C)A was therefore more restrictive than the Directive.
As it was clearly Parliament’s intention to implement the Directive correctly, the EAT held that it was entitled to construe S.188 so as to give effect to the Directive’s obligation. Having regard to the extent of the court’s interpretive function as recognised by the House of Lords in Ghaidan v Godin-Mendoza 2004 2 AC 557 and by the EAT in EBR Attridge LLP v Coleman (Brief 891), the EAT decided that compliance with the Directive could be achieved by deleting the words ‘at one establishment’ from S.188 TULR(C)A. Accordingly, the duty to consult over collective redundancies arises where 20 or more employees are to be dismissed irrespective of where they work. The tribunals’ orders excluding those in any store where fewer than 20 employees were dismissed were therefore set aside.