Back

Redundancy and Collective Consultation: Advocate General’s Opinion on the Meaning of “Establishment”

Rules relating to collective consultation with unions or employee representatives apply when an employer proposes to make 20 or more employees redundant at one establishment within a 90 day period. Collective consultation must commence at least 30 days before the first of the proposed dismissals is to take place, or 45 days before when the proposals relate to 100 or more employees.

Redundancy_Workfoce.jpg

Also, where the obligation to consult collectively applies, employers are required to submit certain information to BIS on form HR1 at least 30 days before the first of the dismissals is to take place

The term “redundancy” in this context includes not only dismissals resulting from the closure of a business or workplace or a reduction in the need for employees, but any dismissal which does not relate to the individual circumstances of an employee – such as where dismissals result from harmonisation of, or otherwise changes to, contracts of employment across all or part of a business.

In a number of cases dealing with redundancies and collective consultation, references were made to the European Court of Justice (the “ECJ”) to clarify some important points, including what is actually meant by “establishment”: should this be construed to mean the whole of the relevant business, or the part of the business contemplating making redundancies, or the unit to which a worker is assigned to carry out their duties, such as each individual site or office?. This is a key issue in many cases of redundancy, and can make the difference between whether the collective consultation regime will apply or not and, where it does apply, its extent and/or duration.

The Advocate General’s role is to consider the submissions that are made by the parties before the ECJ in any case and to give an impartial opinion, which will be considered by the ECJ before it makes a decision. He has given his opinion that (i) the meaning of “establishment” is the unit to which the redundant employees are assigned to carry out their duties and (ii) it is not necessary to aggregate the dismissals across all of an employer’s establishments when determining whether the collective consultation requirements apply.

The next step will be for the ECJ to give its judgment and although it does not have to follow the Advocate General’s opinion, it usual does so. Such a ruling would be good news for employers, as it will limit the application of the collective consultation regime, which can be a significant burden. The decision of the ECJ is expected later this year. In the meantime the prudent approach for employers is to aggregate the number of proposed dismissals across all of its sites when determining whether they should consult collectively.

For further information and for advice relating to redundancy and other employment law issues, please contact me (T: 01952 211 025; E: jennifer.gibson@lblaw.co.uk) or Will Morse (T: 01432 377152; E: will.morse@lblaw.co.uk).