Legal
What are the pitfalls for business?
The high profile collapse of the Woolworths and Ethel Austin Stores in the UK when the companies went into administration meant the loss of thousands of jobs. The European Collective Redundancies Directive consultation requirements apply where there are large scale redundancies in businesses and at least 5 employees from an “establishment” of 21 employees upwards are made redundant during a 30 day period. Where the consultation requirements apply the “establishment” or business must enter into a 30 day consultation period with employees in advance of giving notice of redundancy to try to mitigate their impact on employees.
The employees’ trade union, USDAW, challenged the consultation process entered into by Woolworths and Ethel Austin who did not consult with employees at retail units of less than 20 employees. The Union believed it was unfair that employees from larger retail units only were allowed consult with the companies. They argued that Woolworths should have aggregated the amount of employees being made redundant for the entire business in the period for consultation purposes and not just considered each retail store individually. The European Court considered the consultation requirements and found these do not have to be aggregated within the group for the period. This means businesses or retail stores with less than 20 staff do not have to consult with employees for 30 days in advance of large scale redundancies across the group.
This is significant for employers as breach of the consultation requirements has serious financial implications. Where there is a breach of the 30 day consultation requirement by an employer, each employee may be entitled to compensation for the breach of up to 4 weeks’ remuneration.
In addition if a notice of redundancy is issued to an employee during the 30 day consultation period in breach of the Directive a fine of €250,000 may be levied against an employer.
This is helpful clarity for employers entering into a countrywide or cross-jurisdictional restructuring programme.
If you have any queries on the collective redundancy consultation process and how this should be managed, please contact Davnet@amoryssolicitors.com.