The Opinion of the Advocate General has been released in respect of Woolworths/Lyttle/Bluebird. David Reade QC appeared in the ECJ for Bluebird.

A period of Uncertainty Drawing to a Close

Click here for the OPINION OF ADVOCATE GENERAL

1. Since the decision of the EAT in USDAW v. Ethel Austin Ltd (In Administration) USDAW And Another v. Unite The Union and others UKEAT/0547/12/KN [2013] IRL 886, and the subsequent reference by the CA to the ECJ, there has been considerable uncertainty as to the application of the collective redundancy consultation obligation under S.188(1) of TULRCA in the UK.

2. The CA reference was heard before the ECJ in December 2014 together with a reference addressing the same issue from Northern Ireland, Northern Irish law adopting the same language as TULRCA. A third related issue was joined on a reference from Spain.

3. The  Advocate General’s Opinion was handed down on 5th Feb 2015, Little and others v Bluebird UK Bidco 2 Ltd , Rabal Cañas  v  Nexea Gestión Documental SA and USDAW v Ethel Austin. See Separate link for opinion.

4. It remains the case that Judgment must be awaited from the ECJ itself and there is no certainty that the Court will follow the AG’s opinion. The omens are however good. The AG’s opinion reflects the approach taken by the Commission before the Court, an approach supported by the UK Government and the only employer represented, Bluebird.

5. The core issue in the case for the United Kingdom concerns the use of the term “establishment” within S.188(1) of TULRCA. It was this word that the EAT read out of the statute in the Woolworths decision on the basis that S.188(1) did not comply with the Directive. In the UK this has the consequence that the trigger for the collective consultation obligation became whether an employer is proposing to make more than 20 people redundant across the whole of their organisation within  a 90 day period rather than at a specific establishment within the employer’s structure.6. Readers will be familiar with the issue but a brief summation may be of assistance. Article1(1)(a) of Directive 98/59 defines collective redundancy and provides the trigger conditions for when consultation must occur. The Directive provides two definitions of when consultation must take place and Member States may choose between the two different triggers. The relevant parts of 98/59 are  as follows:

Article 1(1)(a) 1     For the purposes of this Directive:

?(a) 'collective redundancies' means dismissals effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is:

(i)   either, over a period of 30 days: at least 10 in establishments normally employing more than 20 and less than 100 workers,
at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers,
at least 30 in establishments normally employing 300 workers or more,
(ii)     or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question;

7. The UK choice, in S.188, of option (ii) has been the minority choice amongst Member States. In essence the USDAW argument was that (ii), unlike (i), did not limit the number of redundancies to those occurring within any establishment. Thus one can look at the number of redundancies across the entire structure of a single employer. This poses a significant difficulty for many employers, not least where the single employer may have a workforce spread across a number of Member States or even both within and outside the EU. It was also argued that “establishment” should, if it is to be applied, be given a wider meaning in the context of option (ii) than option (i) so as to engage the obligation in a wider number of situations.

8. The AG’s conclusion rejects the USDAW argument. He reasons that there is long settled law in the Court on the meaning of the concept of “establishment”, see  Rockfon  C-449/93 [1996] IRLR 168 ECJ and Athinaïki Chartopoiïa C-270/05 [2007] IRLR 284 ECJ. That case law was concerned with the meaning of that term under Option (i) and had concluded that establishment  meant “‘the unit to which the workers made redundant are assigned to carry out their duties’, the local employment unit.

9. Perhaps not surprisingly the AG starts from the premise that where the term “establishment” has been used in different parts of the Directive it should be interpreted consistently, Para 38. Unless that is the Court had indicated that the interpretation was of limited application and it had not in those decisions. His approach was to assume that this interpretation would apply to the use of the word in the “establishment” in the option (ii) trigger. Later in the Opinion he notes that there is no significance in the use of the singular in (i) and the plural in (ii) in the English version of the Directive. In other languages the same use of the plural and the singular does not always appear.

10. He considered that the Court in Rockfon and Athinaïki Chartopoiïa had rejected an interpretation of “establishment”  which equated the meaning of that term with the entire “undertaking” in question or the  corporate legal entity. He rejects  then the key thrust of the USDAW argument, para 47:

Indeed, the approach argued for by the applicants in Cases C?182/13 and C?80/14 is to extend the protective procedure to all workers dismissed in the course of the same restructuring exercise, irrespective of the size of the establishment at which they worked. Conferring the maximum level of protection by downplaying the method of implementation would obviously be to the advantage of those workers who, under the current understanding of the concept at issue, are not entitled to any protective award. However, such an approach would not be consonant with the minimum harmonisation aim envisaged by Directive 98/59, which, as the Commission rightly stated at the hearing, does not contemplate as a starting point full protection for all — even where the number of dismissals exceeds the thresholds — as the temporal requirement must also be met.

11. It is further of note that the AG focuses upon the argument that the definition was intended to address the impact of redundancies in “a given local context and social environment”. In this context it is the local employment unit which is important  and he was not persuaded that the social protection aim argued by USDAW required a different approach to be taken.

12. Whilst his conclusion is that the key issue is the local unit to which employees are assigned he does note that what these means is a matter for domestic Courts to determine in any given situation:

Lastly, it should also be made clear that it is for the referring courts in all three cases to determine how exactly the local employment unit is constituted in each situation, that being a factual matter. To take an example, if an employer operates several stores in one shopping centre, it is not inconceivable that all those stores should be regarded as forming a single local employment unit. As observed by the Spanish Government, that will depend on a number of factors: (i) whether the joint entity in question can be said to have a certain degree of permanence and stability; (ii) whether it is assigned to perform one or more given tasks; and (iii) whether its workforce, technical means and organisational structure are adequate for the accomplishment of those tasks. It is not necessary for the entity to have legal, economic, financial, administrative or technological autonomy in order to be regarded as an establishment.

Discussion

13. If the Court follows the approach of  the AG then UK domestic law will return to the pre Woolworths EAT position. The C.A will allow the appeal in the Woolworths appeal and find the decision of the EAT to have been wrongly decided.

14. As noted the AG left open the question of a what an establishment means in any specific situation, applying  Rockfon test. There is nothing radical for UK Courts and Tribunals in directing themselves to apply the definition in Rockfon. Organisationally it is possible that an establishment may be found not be limited to a specific geographical location, for example a sales team to which employees are assigned that spans a wide geographic area. If however the AG’s observations that the intent of the Directive was to focus upon the impact of redundancies within a “a given local context and social environment” are reflected in the Judgment of the Court this will add force to the argument that it will only be in an exceptional situation that the test applies so as to embrace an organisational structure which has wide geographical reach with the “establishment” test.

15. There were no indications at the hearing as to when the Judgment of the Court would be handed down. In the interim, whilst the AG’s opinion will give cautious optimism to employers, it is prudent to approach collective redundancies on the basis that the EAT decision remains good law.

David Reade Q.C. – Parklane Plowden
9 February 2015
(David appeared for Bluebird)