Woolworths CJEU decision: how to dismiss 4,440 employees without consulting staff representatives (eu)
Auteur : Alain-Christian Monkam
Avocat au barreau de Paris et Solicitor of the Senior Courts of England & Wales
Blog de droit du travail anglais (Blog de Monkam Solicitors)
In the Woolworths decision of 30 April 2015, the Court of Justice of the European Union appears to allow multi-sites businesses to avoid their consultation obligations relating to collective redundancies as long as the dismissals occur in establishments that employ less than 20 employees . Does this mean a new liberal inflection of the European social case law?
The cases date back to 2008 when two major UK retailers became insolvent.
Riddled with £380 millions of debts, Woolworths entered administration on 27 November 2008. Deloitte was appointed as administrator and acted very quickly: it convoked the unions to a 60-minute meeting on 16 December 2008 and stated that it envisaged to close all the 807 Woolworths stores no later than January 4, 2009 as no potential buyer had been found (28,202 employees would be subjected by a collective redundancy).
Ethel Austin chain of stores also went into administration on 8 February 2010. Here again, the administrator quickly closed the 186 stores and collectively dismissed 1,700 employees.
The unions (notably the Union of Shop, Distributive and Allied Workers 'USDAW') decided to complain to the Employment Tribunal and to claim the breach of section 188 of TURLCA 1992 [minimum consultation period of 90 days -today reduced to 45 days- prior to the implementation of collective redundancies involving 100 or more employees].
Proceedings in Britain
Neither the Woolworths administrators nor the Secretary of State for BIS attended or were represented at the hearings before the Employment Tribunal of Central London. On 18 January 2012, the Tribunal ordered the payment of protective awards to 24,969 dismissed employees which amounted to £67.8 million . Indeed, the tribunal stated that ‘it did not appear to have been meaningful attempt to consult (…)’ (§102).
Further, the Tribunal considered article 1, (1)(a)(ii) of the Council Directive 98/59/EC of 20 July 1998 defining collective redundancies as ‘(…) where the number of redundancies is over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question’.
The Tribunal of London found that each individual store constituted a separate and distinct establishment; that there would be no duty to consult where the stores had less than 20 employees (§63). Consequently, the Tribunal excluded from the protective awards all the dismissed employees who worked in the Woolworths stores with less than 20 employees (3,233 employees working in 180 stores were concerned).
In a decision of 20 November 2011 concerning Ethel Austin, the Employment Tribunal of Liverpool reached similar conclusions and granted the protective awards only to 490 out of the 1,700 employees collectively dismissed by Ethel Austin.
The trade unions appealed the employment tribunal decisions. By decisions of 30 May 2013 and 2 July 2013, the Employment Appeal Tribunal reversed these two judgments and extended the protective awards to the 4,443 employees of Woolworths and Ethel Austin who had been excluded . The Employment Appeal Tribunal observed that ‘the insertion in the Directive of the phrase “at least 20 whatever the number of workers normally employed in the establishments in question” (…) emphasises that the location where people work is irrelevant’ (§41).
Liable for the payment of the protective awards up to 60 days, the Secretary of State for BIS appealed the EAT decision. By a decision of 22 January 2014, the Court of Appeal referred the case to the Court of Justice of the European Union on the interpretation of Article 1(1)(a) of the Council Directive 98/59/EC of 20 July 1998 .
The CJEU decision
By its decision of 30 April 2015, the Court of Justice actually confirmed the former analysis of the Employment Tribunals of Central London and Liverpool. First of all, the Court recalled that it had already interpreted the concept of establishment in its earlier decisions. In Rockfon, the Court said that ‘the term ‘establishment’ in Article 1(1)(a) of Directive 98/59 must be interpreted as designating, depending on the circumstances, the unit to which the workers made redundant are assigned to carry out their duties’.
The Court of Justice also recalled the objectives of the directive of 20 July 1998 which are ‘not only to afford greater protection to workers in the event of collective redundancies, but also to ensure comparable protection for workers’ rights in the different Member States and to harmonise the costs which such protective rules entail for EU undertakings’.
According to the Court of Justice, interpreting that the ‘establishment’ so as to require account to be taken of the total number of redundancies across all the establishments of an undertaking would be precisely contrary to these objectives of the Directive and could ‘entail very different costs for the undertakings that have to satisfy the information and consultation obligations (…) in accordance with the choice of the Member State concerned’.
The Court of Justice, however, softens its position by stating that the Directive ‘gives Member States the right to apply or to introduce laws, regulations or administrative provisions which are more favourable to workers or to promote or to allow the application of collective agreements more favourable to workers’.
According to the decision of the Court of Justice, it appears that companies located in some Member States, would be allowed to escape their consultative obligations by splitting the collective redundancies between their establishments as long as they employed less than 20 employees.
The Court of Justice decision does not ensure comparable protection to workers facing redundancies within the Member States. For example, in France, the tribunals held that the number of redundancies should be counted within the company as a whole (or even within aggregated companies) where the decision to dismiss is taken at that level .
- Union of Shop, Distributive and Allied Workers (USDAW) and B. Wilson v WW Realisation 1 Ltd (in liquidation), Ethel Austin Ltd and Secretary of State for BIS – CJEU Case C-80/14
- Section 188 of TURLCA 1992
- USDAW and others v WW Realisation 1 Ltd (in Liquidation) Reviews and another ET / 3201156 / 10 and others.
- Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies
- USDAW and others v Ethel Austin ET Liverpool – 20 November 2011
- USDAW v Ethel Austin Ltd (In Administration) UKEAT/0547/12/KN; USDAW & Anor v Unite The Union & Ors UKEAT/0548/12/KN
- USDAW & Anor v Ethel Austin Ltd & Ors  EWCA Civ 142
- Rockfon A/S v Specialarbejderforbundet i Danmark C-449/93, EU: C: 1995: 420
- Cass soc May 7, 2003 No. 08-45113