March 10, 2015

ECJ meaning of “establishment”

The Advocate General’s opinion on the meaning of "establishment" (and this of course applies in respect of the collective redundancy consultation obligations in circumstances where 1200 employees were made redundant from Woolworths when it went into administration) has not pleased the employees but will provide welcome relief for the employers assuming it is followed in the ECJ.

The Advocate General’s opinion is that the meaning of "establishment" is the unit to which the redundant employees were assigned to carry out their duties. There is no requirement to aggregate the dismissals across all an employer’s establishments to determine whether the collective consultation protection in the EU Collective Redundancies Directive applies. In the Woolworths case, therefore, each of the separate shops from which the employees were made redundant constitutes a separate establishment rather than the organisation itself being one establishment, to which the collective redundancies’ requirements would have applied given the number made redundant. If one establishment is each separate shop, this was less than 20 employees per establishment and so the collective consultation requirements would not have arisen. The Advocate General concluded that the UK had correctly implemented the requirements of the EU Directive. It remains to be seen whether the ECJ will follow the Advocate General’s opinion but it usually does.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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