February 27, 2015

Collective Redundancy: Meaning of "Establishment"

The Advocate General (AG) of the European Court of Justice has issued his long anticipated opinion in the case of USDAW and another v WW Realisation 1 Ltd (in liquidation) and others (C-80/14) concerning the meaning of “establishment” for the purposes of collective redundancy.

We reported on the Employment Appeal Tribunal (EAT)’s ground breaking decision in this matter in July 2013. By way of reminder, the EAT held that collective consultation obligations are triggered when an employer proposes to dismiss as redundant 20 or more employees in a 90-day period irrespective of the number of establishments in which the employees are located, rather than at one establishment (as had previously been the case). The AG’s opinion suggests that EU law requires the number of redundancies at one establishment to be considered, which would mean the EAT’s decision was wrong. The AG explained that an “establishment” is a “unit to which the workers made redundant are assigned to carry out their duties”; however, it is not necessary for that unit to be autonomous. He stressed that what constitutes a “unit” should be determined by the national courts on the facts of each case. Therefore, it would still be possible for more than one unit to constitute a single establishment.

Although the AG’s decision is encouraging for employers, it is not binding on the ECJ and there will be no certainty on this issue until the ECJ’s judgment is rendered (which we expect will be later this year). In the meantime, the EAT decision stands.

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