Pick 'n' mix - "Woolworths" case referred to Europe

27 January 2014

Stephen Musgrave

The Court of Appeal has referred USDAW -v- Ethel Austin Limited (in administration) and another – known to as the "Woolworths case" - to the Court of Justice of the European Union on the question whether Directive 98/59 on Collective Redundancies has vertical direct effect. This follows the referral of a similar case in Northern Ireland, Lyttle –v- Bluebird UK Bidco Limited, to the CJEU. The decision of the CJEU will clarify what counts as an "establishment" for the purposes of the collective information and consultation obligations contained in Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992.

Employees made redundant as a result of the administrations of Woolworths in 2008 and Ethel Austin in 2011 received no protective awards. At first instance the Employment Tribunal found that each store was a separate "establishment" for the purposes of Section 188 meaning the duty to inform and consult was not engaged for stores with fewer than 20 employees. This meant that 3,233 Woolworths' redundant employees were not entitled to a protective award. In the Ethel Austin case the company failed to inform or consult with any employees but the Tribunal only made protective awards to those employees at locations with 20 or more employees. 1,210 employees received no protective award.

USDAW appealed to the Employment Appeal Tribunal on the grounds that in order to comply with the Collective Redundancies Directive 98/59, Section 188 should be interpreted purposively as requiring an employer to consult where it proposes to dismiss as redundant 20 or more employees at one or more establishment where "establishment" is interpreted to mean the whole of a relevant retail business rather than each of its stores.

USDAW was successful in its appeal, the EAT accepting that Section 188 is more restrictive than the Directive, the upshot being that the words "at one establishment" should be disregarded. The EAT also looked at the history of Section 188 which, when originally enacted, applied where any number of employees were to be made redundant, the threshold of 20 only being introduced subsequently by the Government, and with no indication in the run-up to those changes that the words "at one establishment" would be adopted, notwithstanding that the clear Parliamentary intention was to implement the Directive correctly.

Though the Secretary of State, being a respondent in the Woolworths case because the company had gone into administration, did not make submissions to the EAT, following the decision the Department for Business, Information and Skills indicated that it would appeal, leading to this week's hearing ruling being at the Court of Appeal.

It is difficult to see in light of the relevant case law in other European jurisdictions such as the Greek case of Athinaiki –v- L Panagiotidis and others and the Rockfon case in Denmark in particular that "establishment" will not be interpreted purposively by the CJEU, meaning that the UK will no longer be able to rely on Section 188 as currently drafted but, as ever, the decision of the CJEU remains to be seen.