Retailer’s relief at redundancy reversal!

It’s not just a tongue twister; this is great news for businesses.

For many years, employers were only required to engage in collective consultation in redundancy situations when 20 or more employees were affected at the employee’s place of work (known as the “establishment”). If collective consultation is triggered, it adds an additional layer of statutory formality to redundancy situations. Employers are required to elect employee “representatives” to facilitate the consultation, in addition to following a strict redundancy procedure which prevents redundancies from taking effect for either 45 or 90 days, until the consultation period has expired. If employers don’t collectively consult when they are required to so for the minimum periods required, they can be liable for up to 90 days’ gross actual pay per employee. Ouch.

Confusion arose recently following the well reported cased of Woolworths and Ethel Austin when the trade union successfully argued in the Employment Appeal Tribunal (EAT) that the term “establishment” should be taken to mean the entire business of the company, and not each individual location. This was a real headache for businesses with several premises, (retailers in particular) which individually have less than 20 staff at each store, because it meant that they could no longer treat each premises on an individual basis, and would need to aggregate the number of staff they had across multiple establishments when considering if the duty to collectively consult arose.

Many employers will however breathe a sigh of relief following the European case of Lyttle v Bluebird, which has held that a single retail store is capable of being an 'establishment' for the purposes of collective redundancy consultation. This means that many companies can treat each store on a store-by-store basis, so only when employers are dismissing 20 plus employees at one store, are their obligations to collectively consult triggered. For many, this is a welcome return to the pre EAT Ethel decision (which is now likely to be reversed by the Court of Appeal), and will no doubt save many businesses time and money.

How can you find out more?
If you would like any further information on the issues raised above, or any employment law issue, please contact Chris Aldridge on 01242 248431 or email chris.aldridge@bpe.co.uk.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.