UK Collective Redundancy Laws Challenged When 20+ Employees are Impacted Within a 90 Day Period

Doyle Clayton Solicitors explains the current uncertainty over the extent of an employer’s obligation to consult about large scale redundancies in the UK.

The Court of Justice of the European Union (CJEU) is to consider whether UK laws on collective redundancy consultation meet the requirements of the EC Collective Redundancies Directive.

UK legislation requires employers to consult with a recognised trade union or employee representatives where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

In the case of USDAW v Ethel Austin Ltd (in administration) and another, the issue was whether each store in a chain of shops was a separate establishment or whether “establishment” should be understood in a much wider context. If each store was a separate establishment, then the employer was not obliged to consult about redundancies in stores employing fewer than 20 employees.

The Employment Appeal Tribunal decided that UK law does not comply with the EC Collective Redundancies Directive. The words “at one establishment” should be ignored when calculating the number of proposed redundancies. Collective redundancy obligations are therefore triggered whenever an employer proposes 20 or more redundancies within 90 days or less, irrespective of whether these are at the same or different establishments.

This decision has potentially far-reaching consequences for employers as it extends the scope of collective redundancy consultation obligations in the UK. Following an appeal to the Court of Appeal the question of whether UK legislation complies with EU law has been referred to the CJEU.

As a result, it will now be some time before employers employing staff in the UK can be sure of the scope of their collective redundancy consultation obligations. However, for now the EAT decision in this case remains binding. Employers should therefore continue to consult whenever 20 or more redundancies are proposed within 90 days, even where they are at different establishments.

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Written by Peter Doyle
Managing Partner
Doyle Clayton Solicitors