Tom Stenner-Evans
Posted on 15 Jul 2013

Collective Consultation – the Woolworths Decision at Last!

A recent Employment Appeal Tribunal decision has resulted in a fundamental change to the law on collective consultation, making the road ahead one that will have to be carefully navigated by employers.

The case of USDAW v WW Realisation Ltd involved the collapse of high street store Woolworths, where trade union USDAW sought protective awards for a failure to consult. Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) provides that employers only have a duty to consult employee representatives where 20 or more redundancies are proposed at one ‘establishment’ in a 90 day period. The Employment Tribunal ruled, in line with section 188, that each Woolworths store was a separate ‘establishment’ and so claims relating to stores with less than 20 staff failed. As a result, those employees in bigger stores were given protective awards which totalled £70 million, whilst employees in smaller stores of under 20 staff received nothing.

USDAW appealed the decision to the EAT, where a landmark decision was handed down. The EAT ruled that the duty to consult would apply to all the redundancies made by Woolworths, regardless of whether employees were based at stores with more or less than 20 staff. The judge declared that the ‘at one establishment’ rule contained in TULRCA was incompatible with the corresponding EU Directive. The EU Directive states that an employer has a duty to consult where 20 or more redundancies by the same employer are made within any 90 day period, ‘whatever the number of workers in the establishments in question’. Therefore, the ‘at one establishment’ rule in TULRCA had to be disregarded in order for UK legislation to properly reflect EU law.

It is unusual for a court to disregard the words of a statute in this way. However, having examined the Government’s consultation on the implementation of TULRCA, as well as the parliamentary debates surrounding the legislation, the EAT was satisfied that the ‘one establishment’ specification had not been mentioned and, therefore, it could not be regarded as integral to the policy of the legislation. The EAT was persuaded that parliament’s intention had been to correctly implement EU law.

The judgement in USDAW v WW Realisation Ltd will significantly affect large, multi-site organisations which have previously been able to use the ‘one establishment’ test to side-step the need for collective consultation. It seems that large employers such as these will need to ensure an increasingly ‘joined-up’ approach between their different sites. They will need to be aware of the number of redundancies being proposed across the organisation at any one time, in order to avoid inadvertently breaching the collective redundancy obligations.