Rachael Lloyd
Posted on 9 Feb 2015

Employment Law Update – Collective Redundancy / Welfare Benefits

Case Update

USDAW and another v WW Realisation 1 Ltd (in liquidation) and others (C-80/14), Lyttle and others v Bluebird UK Bidco 2 Ltd (C-182/13) and Canas v Nexea Gestion Documental SA Fondo de Garantia Salarial (C-392/13)

'Establishment' means a local employment unit for collective redundancy purposes (Advocate General's Opinion)

The Facts

Readers may well have previously heard about the 'Woolworths and Ethel Austin' case which was appealed to the Court of Appeal by the Secretary of State.

WW Realisation 1 Limited and Ethel Austin Limited were national retailers, trading as 'Woolworths' and 'Ethel Austin'. Woolworths went into administration in November 2008 and Ethel Austin in March 2010, resulting in large-scale redundancies. Employment Tribunal awards for failure to inform and consult, under section 188 of TULRCA, were made, but only in respect of those employees who worked at stores with 20 or more employees. The Tribunal held that each store was a separate 'establishment' for TULRCA purposes. Consequently, the duty to inform and consult had not been engaged in respect of stores with fewer than 20 employees and those employees were not entitled to a protective award.

The employees' union, USDAW, appealed to the Employment Appeal Tribunal ('EAT'), and was successful. The EAT held that the words 'at one establishment' were incompatible with the Directive and that those words should be disregarded for the purposes of a collective redundancy involving 20 or more employees. In other words, employers must collectively consult whenever they planned to make 20 or more redundancies within 90 days across their business, regardless of how many were in a single location.

The Secretary of State appealed to the Court of Appeal, who referred the cases to the European Court of Justice ('ECJ').

Decision

The Advocate General's view was that 'establishment' denotes the local employment unit to which the redundant workers are assigned to carry out their duties. Therefore, the AG disagreed with the EAT's approach. He recommended that the focus should be on redundancies made in a particular establishment, not across the whole organisation.

Tips for Employers

The Advocate General's opinion is not binding, so unless and until the ECJ formally overrules it, the EAT's test remains in force. However, the Advocate General's opinion is a welcome development for employers. If ratified by the ECJ, it will mean that collective consultation obligations will only apply to larger establishments where there are sufficient numbers of affected employees.

The ECJ's decision in this case is anticipated later in 2015, but employers may be comforted by the fact that the ECJ agrees with around 80% of the Advocate General's opinions.


Legislation Update

April 2015 Increases to Statutory Maternity, Paternity, Adoption and Sick Pay

The Welfare Benefits Up-rating Order 2014 has been made in accordance with the Welfare Benefits Up-rating Act 2013, which provides for the up-rating of certain social security benefits and payments. The Order increases various payments by 1% in the tax year 2015-2016.

As of 5 April 2015, statutory maternity, adoption, paternity, additional paternity and shared parental pay will increase to £139.58 a week (up from £138.18).

From 6 April 2015, the weekly rate of statutory sick pay will increase to £88.45 (up from £87.55).

Additional paternity leave and pay will only be available in respect of babies whose expected week of childbirth is before 5 April 2015, or for children who are placed for adoption before that date.