The latest instalment of the long-running Woolworth’s case has just emerged in the form of the ECJ Advocate-General’s opinion that an ‘establishment’ is a “local employment unit”.

The ECJ has today published the Advocate General’s opinion in three linked cases on the meaning of “establishment” for the purposes of collective redundancy consultation. The point is of potentially huge significance because the answer determines whether an employer will be caught by the collective consultation obligations under TULRCA 1992. The earlier ruling in the Woolworths case had effectively meant that if 20 or more redundancies are proposed to take place anywhere within the employer’s business within a period of 90 days, then the employer’s collective consultation obligations will be engaged.

The Advocate General concluded that an ‘establishment’ is what he referred to as the “local employment unit”. He explained that this is “the unit to which the workers made redundant are assigned to carry out their duties”. In reaching his conclusion, he made clear that he had taken into account that the point of the European directive is to provide a cushion against the local effects of collective redundancies. He also stressed the importance of certainty and uniformity of the meaning of the term ‘establishment’ across EU states.

If the ECJ accepts the Advocate General’s opinion it will effectively mean that the Woolworth’s case was wrongly decided, and that what is an ‘establishment’ will again become a live legal issue. It is likely to mean that fewer situations will be caught by the collective redundancy legislation.

It is also important to appreciate that the Advocate General’s opinion expressly states that it is for the national courts to determine, on the facts of each individual case, what is the “local employment unit”. As previous case law, such as Barratt Developments v UCATT, has made clear, courts may be willing to find that employees spread over several geographical sites or offices may be regarded as working within a single “establishment” for collective redundancy purposes, thereby engaging the employer’s collective consultation obligations.

The Advocate General illustrated his opinion with the example of an employer with several branches within a shopping centre, indicating that those branches might amount to a single local employment unit, and stated that “It is not necessary for the entity to have legal, economic, financial, administrative or technological autonomy in order to be regarded as an establishment.”

Although the ECJ usually does agree with the opinion of the Advocate General, it is not bound by it, so this opinion may not be the final word on the matter. We will report further when the ECJ’s final decision is handed down. Until then, employers potentially affected by this decision should exercise a degree of caution before assuming that their situation will not be caught by the collective consultation legislation.

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Louise McCartney

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Posted on 06/02/2015 in Legal Updates

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