The Government has been given leave to appeal against an Employment Appeal Tribunal ruling that has moved the goalposts for employers planning company-wide redundancies.
The tribunal found in the Usdaw v Woolworths case that administrators Deloitte had not followed the correct consultation procedures when closing the UK’s 800-plus Woolworths stores in late 2008/early 2009. In May this year, 3,200 ex-Woolworths staff and 1,200 employed by collapsed clothing business Ethel Austin received compensation because they had not been consulted in the same way as colleagues working at larger stores. Because there were fewer than 20 staff in the affected stores, they were not covered by the same collective redundancy consultation legislation.
In what has been labelled ‘the most important employment case of the last few years’, Judge Jeremy McMullen set an employment law precedent by ruling collective redundancy discussions should no longer be limited to job losses at a single site. He said the words “at one establishment” should be removed from the law.
The ruling means employers planning 20 or more job losses in a 90-day period must consult with staff. They must calculate all possible redundancies across all sites and departments, rather than on an individual office or departmental basis.
The Department of Business, Innovation and Skills (BIS), which did not attend the tribunal, has been given permission to appeal against the ruling. It raised concerns about its wider implications for businesses. If the appeal is successful, fewer than 20 redundancies at one site/office will not require a formal consultation.
Consultations for collective redundancies (20 or more redundancies within 90 days throughout the business) under the Woolworths precedent mean:
On announcing redundancy proposals, companies must open consultations with unions or staff representatives.
The consultation period must last for at least 30 days.
When 100 or more staff are affected, consultations must last for at least 45 days.
No staff can be made redundant until the consultation period is completed.