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EU redundancy ruling welcomed by employers

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The Advocate General at the European Court of Justice, yesterday advised on a long-standing dispute over redundancies in the UK: in the opinion of the Advocate General, employers in the UK should not be bound by rules to include staff in a “collective redundancy” programme every time more than 20 workers are laid off anywhere in their estate in any 90-day period rather. The crux of the dispute was whether the 20 or more employees have to be laid off “at one establishment” for a collective redundancy consultation to be legally necessary.

The dispute relates back nearly seven years to the mass spate of redundancies after Woolworths shockingly entered administration in November 2008 and Ethel Austin in 2010.

By law, employers must keep employees on for at least 30 days when between 20 and 100 are made redundant, or for 45 days if more than 100 are laid off. Previously, employers tended to embark on redundancy exercises without consulting with staff collectively unless 20 or more redundancies were made at “one establishment”, to use the terms of the Trade Union and Labour Relations (Consolidation) Act 1992.

Employees made redundant at stores employing 20 or fewer people therefore missed out on payments due to quicker, non-collective redundancy consultations.

The union USDAW bought the case before the Employment Appeal Tribunal where it was ruled that the “at one establishment” clause should be disregarded in any redundancy involving 20 or more employees. Consequently, millions of pounds of compensation was paid out to former employees of smaller stores. The matter was subsequently contested at the Court of Appeal and now is up for ruling at the European Court of Justice.

The General Advocate’s advisory ruling is non-binding, although the European Court of Justice will almost certainly follow the advice of the Attorney General.

UK businesses will be delighted with the ruling, as it reduces the costs of large-scale redundancies.

Omer Simjee, an Employment Partner at national law firm Irwin Mitchell, said:

“The recommendation by the Advocate General will be met with a sigh of relief from employers as the outcome is essentially good news for UK businesses, but only if the ECJ follows his opinion that UK law as previously interpreted pre Woolworths is compatible with the Directive. 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.

Thousands of employees affected by the case will be hugely disappointed as the chances are they will lose their claims for compensation if the UK court follows the Advocate General’s recommendation.”

In large companies, 20 or so quite unrelated redundancies might easily occur, meaning business could have been legally bound to implement collective redundancy programmes regardless of context.

Published on Friday 06 February by Editorial Assistant

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