USDAW v Ethel Austin Ltd

Where a member state has adopted the 90-day threshold in Article 1(1)(a)(ii) of Directive 98/59/EC, collective-consultation rights arise when an employer proposes 20 or more redundancies in that period. The threshold is not confined to redundancies at a single site.

Section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 must, so far as possible, be construed consistently with that obligation. The words “at one establishment” were deleted by interpretation. That construction gave effect to the Directive’s protective purpose and was consistent with the legislative scheme, which did not treat a single-establishment restriction as fundamental.

The claimants appealed protective-award decisions concerning the insolvencies of Ethel Austin and Woolworths. The Employment Tribunals had found failures to consult and made protective awards, but excluded employees dismissed from locations where fewer than 20 employees had been dismissed.

The appeals raised one common issue: whether section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 limited the consultation duty to 20 proposed redundancies at a single establishment, or whether the 20 redundancies could be counted across the employer’s establishments. The respondents did not participate in the EAT hearing.

1. Appeals allowed. The exclusions from the protective awards were erroneous. Section 188(1) had to be construed so that the duty to consult arose where an employer proposed 20 or more redundancies within 90 days, irrespective of the establishments at which the employees worked.
2. Article 1(1)(a)(ii) of Directive 98/59/EC made the relevant threshold 20 dismissals over 90 days, whatever the number normally employed in the establishments concerned. Unlike option (i), it imposed no requirement to consider the size of a pre-existing workforce or to identify an establishment. The domestic phrase “at one establishment” therefore made the protection narrower than the Directive.
3. The court applied the EU-law conforming interpretation principle. A court may add, remove or adjust statutory language where that is necessary to achieve the Directive’s result, provided the construction remains consistent with the underlying thrust and scheme of the legislation. Deleting the single-establishment words did so. The consultation paper, parliamentary material and explanatory material showed a purpose to implement the Directive and to set a threshold of 20 redundancies; they did not show that a site-based restriction was fundamental policy.
4. The court declined to follow the earlier EAT approach that the incompatibility was incapable of remedy by construction. Subsequent authority on the scope of the interpretative obligation made the purposive construction available. The court would alternatively have construed each retail business as one establishment, but deletion of the words was clearer and avoided unnecessary fact-sensitive enquiries.
5. It was unnecessary to determine the alternative arguments concerning directly applicable EU rights between private parties or against the Secretary of State. The court expressed only tentative views that those arguments had substance.
6. The orders excluding employees at smaller locations were set aside. Counsel were given time to draw the orders.

• Employment Appeal Tribunal: Appeals allowed. The EAT set aside the exclusions from the protective awards.
• Employment Tribunals: The Liverpool and London Central Tribunals made protective awards for failures to consult, but excluded employees at establishments where fewer than 20 employees were dismissed.