Welcome Clarity for Employers on the meaning of establishment

Posted 20/05/2015

At long last, we have a European decision which has clarified what the meaning of “establishment” is for collective redundancy purposes.  This decision has overturned the surprising Employment Appeal Tribunal (EAT) Judgment which stated that all dismissals needed to be looked at within an employer’s establishments (which could include a variety of geographical locations) and as soon as the number of dismissals totalled 20 or more at one establishment within a period of 90 days, the duty to collectively consult was triggered.

The European Court has stated that this EAT Judgement is not correct and has returned the UK Law to what it was previously which is that “establishment” is the entity to which workers are assigned to carry out their duties.

This appears to be the final word on the question of “establishment” returning to the law to its previous state which is a welcome clarification for employers.  This means that there are now a number of factors that need to be looked at in determining what the establishment is. 

Some of the reasoning that the court gave for this decision was that in very small redundancies within an employer it would not be appropriate to follow a full collective consultation process as this would be administratively burdensome and result in higher costs. 

Should you require any further information in relation to this case or require any practical guidance on how to determine what an establishment is, please contact Claire Sleep on 01223 431094 or claire.sleep@ashtonslegal.co.uk.