USDAW v Ethel Austin in the ECJ

Michael Ford - 12th May 2015

The recent judgment of the Court of Justice in Case C-80/14, USDAW v Woolworths (30 April 2015) is a further indication that social Europe is no longer its cherished offspring. The detail is of interest to labour lawyers but the reasoning of the ECJ is of wider importance. Following Alemo-Herron where the ECJ for the first time recognised the fundamental freedom of employers to conduct a business, the USDAW decision is a further sign that the ECJ is responding to the austerity politics of (almost) all the governments of Member States. Rights to collective consultation and collective bargaining are, it seems, one potential casualty of these policies. The means of achieving this is to give reduced importance, in interpreting Directives, to their social objectives.

Directive 75/129 on collective redundancies (now Directive 98/59) was introduced in response to a multinational, AZCO, deciding to dismiss 5,000 workers in Member States where redundancies cost the least. The Directive emphasised in its preamble its primary objective: “that greater protection should be afforded to workers in the event of redundancies while taking into account the need for balanced economic and social development”. In common with another Directive passed at about the same time, Directive 77/187 on transfers of undertakings, consultation with worker representatives was central to this social model. While neither Directive stopped employers deciding to restructure their businesses or dismiss workers as a result, both required consultation with workers representatives about the consequences.

When Woolworths went into administration in 2009 it failed to consult with USDAW, the employees’ union, as required by domestic legislation implementing the collective redundancies Directive, the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Of the 27,000 workers who were made redundant, over 3,000 happened to work at stores which employed fewer than 20 workers. They, unlike their colleagues, received no compensation from the employment tribunal for the failure to consult because the duty to consult under TULRCA was only triggered if 20 or more employees were made redundant at “one establishment” over a 90-day period.

The Directive was worded differently, however. It defined collective redundancies as including circumstances of “at least 20 [redundancies], whatever the number of workers normally employed in the establishments in question”. This wording allowed the Employment Appeal Tribunal (EAT), presided over by the late Jeremy McMullen, to interpret the Directive in accordance with its core objective of worker protection and hold that it could apply where a single employer, like Woolworths, took a decision to make more than 20 workers redundant even if some of those workers were located at individual “establishments” (shops) employing fewer than 20.

The ECJ has now, in effect, reversed that ruling. As always in a judgment which has to be agreed sentence by sentence among five judges, the language is terse; but the current detectable in Alemo-Herron now looks to be a change in the tide.

Focussing on the literal meaning of the term “establishment”, the ECJ adopted the same interpretation of the term it had applied to a different provision in Article 1 in Rockfon and held that “establishment” meant the unit to which workers were assigned. It did not, therefore, require aggregation of workers across establishments of the same employer. Each worker at Woolworths will, presumably, be found to have been assigned to his or her particular store, so that unless they worked at a store with at least 20 employees, no duty to consult their representatives arises. The wider implications of the decision for geographically fragmented businesses are clear.

Of more interest than the detail is how the ECJ dealt with the objective of worker protection. In Rockfon the ECJ interpreted another limb of Article 1 in order to widen the scope of the Directive, in accordance with the objective of worker protection. The ECJ acknowledged that interpreting the Directive as the EAT had done would “admittedly, significantly increase the number of workers eligible for protection under Directive 98/59, which would correspond to one of the objectives of that Directive”. But the Directive, according to the ECJ, had another objective: to “harmonise costs which such protective rules entail for EU undertakings”. The envisaged harmonisation is, naturally, downwards not upwards; and this second objective, you can probably guess, cancelled out the first.

This quiet adjustment of the weight of objectives allowed the ECJ to fall back on the “ordinary meaning” of “collective redundancies”. It would be contrary to that ordinary meaning if a single worker at one “establishment” in a town could aggregate himself with others at working different establishments elsewhere. But whose “ordinary meaning” is this? Clearly not the ordinary meaning of “collective redundancies” to the workers at Woolworths, who might be surprised to learn that a single decision taken by a large corporation to make many thousands of them redundant was not within the ordinary meaning of “collective redundancies”.

The decision in USDAW comes at a bad time for those who believe in legal rights to collective consultation. In a domestic decision one week earlier the High Court in BALPA v Jet2.Com Ltd held that the domestic rights to legally enforceable trade union recognition and collective bargaining only required that an employer discussed pay, hours and holidays with a recognised union. The end-game for the lengthy statutory recognition process is no more than the appearance of negotiation. In times of acute economic crisis, management must be left free to manage.

Author profile

Michael Ford QC is a barrister at Old Square Chambers in London.

Citations

Michael Ford “USDAW v Ethel Austin in the ECJ” (OxHRH Blog, 11 May 2015) <http://humanrights.dev3.oneltd.eu/usdaw-v-ethel-austin-in-the-ecj/> [Date of Access].

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