Employment e-Brief: Collective Redundancy Consultation

Collective Redundancy Consultation

In the case of Lyttle & others v Bluebird, the European Court of Justice (“ECJ”) confirmed that a single store could be an ‘establishment’ for the purposes of collective redundancy consultation.

Background

• Bonmarché operated 394 stores across the United Kingdom and employed 4,000 people. It regarded its stores in Northern Ireland and its single Isle of Man store as constituting one region (‘the Northern Ireland region’) for the purposes of its business in the United Kingdom. At the beginning of 2012, there were 20 stores in the Northern Ireland region, employing 180 people.  The claimants were employed by Bonmarché at four stores in Lurgan, Banbridge, Omagh and Belfast, which each employed fewer than 20 staff.
• Bonmarché became insolvent and the company was transferred to Bluebird on 20 January 2012.  Bluebird began a business restructuring process entailing the closure of many stores, including those in which the claimants worked.  Following the dismissals effected in 2012 by Bluebird, Bonmarché was left with 265 stores in the United Kingdom, employing 2,900 staff. The number of stores situated in the Northern Ireland region was reduced to 8 and the number of staff employed decreased to 75 employees.  The claimants were dismissed, together with other employees, on 12 March 2012. The dismissal process was not preceded by any consultation procedure as referred to in the Directive.

Decision

The ECJ held that ‘it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the ‘establishment”  which is relevant for collective consultation.

This decision follows the ECJ’s recent decision in the Woolworths and Ethel Austin cases, in which the ECJ ruled that in the context of collective redundancy:

• an “establishment” refers to an individual workplace and not to the employer as a whole; and
• when establishing whether an employer “is proposing to dismiss at least 20 employees within a period of 90 days or less”, each workplace should be considered separately.

There was therefore no obligation to collectively consult with staff who worked in a store that employed fewer than 20 employees.

The Woolworths and Ethel Austin cases has been referred back to the Court of Appeal for disposal in accordance with the ECJ’s decision which means that the Court of Appeal will overturn the EAT’s decision.

The ECJ noted in Lyttle v Bluebird that interpreting the term ‘establishment’ in the wider sense would bring within scope not only a group of workers affected by collective redundancy but also, in some circumstances, a single worker of an establishment — possibly of an establishment located in a town separate and distant from the other establishments of the same undertaking — which would be contrary to the ordinary meaning of the term ‘collective redundancy’.

In addition, the dismissal of that single worker could trigger the information and consultation procedures referred to in the provisions of the Directive which are not appropriate in such an individual case.

For further advice please contact a member of the employment team on 0113 227 0344.