Eversheds comments on EAT decision on UK employment law following insolvencies

Eversheds partner Mark Fletcher has commented on the Employment Appeal Tribunal’s (EAT’s) decision that UK law is not compatible with EU law on the protection of workers during such large-scale redundancies, following the Woolworths and Ethel Austin insolvencies.

Specifically, the EAT held that workers being made redundant in the smaller shops should have been collectively consulted, despite UK legislation limiting the duty to consult to larger establishments where there are 20 or more redundancies.

The government is appealing the EAT’s decision and the issue has been referred to the European Court of Justice to clarify EU law in this area, with the hearing taking place on 20 November. 

Fletcher said: ‘The EAT’s decision that collective redundancy consultation is triggered by a proposal to dismiss 20 or more employees per employer, not per establishment such as a shop or office, turned decades of accepted practice on its head.

‘Overnight, employers were exposed to serious potential liabilities for a failure to consult where previously there had been none. For large organisations with devolved control, the task of ensuring that ad-hoc redundancies dotted around different workplaces did not collectively tip over the 20 or more trigger has been a serious challenge, potentially delaying restructurings and adding costs.

‘Employers are hoping that the outcome of Thursday’s hearing will reverse the EAT’s decision. However, the language used in the relevant EU directive is unclear and it could go either way. The confused state of EU law in this area is underlined by Spanish and Northern Irish cases, also before the court on Thursday, which raise related questions over the interpretation of EU collective redundancy law in those countries.’