Case C-182/13, Lyttle – objecting to a collective redundancy without consultation [judgment 2015, ECLI:EU:C:2015:317]

When a large retailer trading in the UK decides to make more than a thousand people redundant, can it legitimately wriggle out of the ‘duty to consult’ that is enshrined in the EU’s collective redundancies Directive 98/59/EC for those stores it ran which only employed less than 20 people?

Facts
Bonmarché is a women’s clothing store. It is a large retailer with hundreds of stores across the UK. In January 2012, Bonmarché employed 4000 employees in the UK, of whom 180 worked in its 20 stores in Northern Ireland. But Bonmarché was in difficulty and became insolvent.

On 20 January 2012, the business of Bonmarché was transferred to Bluebird, a company that began to restructure the business. On 12 March 2012, Bluebird made a quarter of Bonmarché UK’s workforce redundant. The sales region of Northern Ireland was particularly hard hit; of the 20 stores there, 12 were closed and its workforce was slashed from 180 employees to 75.

Among the many people to lose their jobs in Northern Ireland was Valerie Lyttle, the manager at Bonmarché’s store in Lurgan – a store that employed fewer than 20 people.

Valerie Lyttle brought a claim against her employer. She claimed that she had been unfairly dismissed by way of redundancy. She also claimed that since Bonmarché did not recognise any trade union for collective bargaining processes, and since there were no ‘employee representatives’, she was allowed to complain that her employer had failed to consult over the redundancy proposals. And that this lack of meaningful consultation meant that her employer had acted unlawfully.

The panel of the Industrial Tribunals (Northern Ireland) hearing her case decided to focus, for the time-being, on the issue of the ‘protective award’ (the claim brought where there is no consultation prior to dismissal).

Although the protective award claim was governed by a piece of administrative law that was particular to Northern Ireland, the administrative law did purport to implement the collective consultation requirements of the EU’s collective redundancies Directive, Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies (OJ [1998] L225/16).

Section I of the Directive deals with ‘Definitions and scope’, and provides:

Article 1
1. For the purposes of this Directive:
(a) ‘collective redundancies’ means dismissals effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is:
(i) either, over a period of 30 days:
- at least 10 in establishments normally employing more than 20 and less than 100 workers,
- at least 10 % of the number of workers in establishments normally employing at least 100 but less than 300 workers,
- at least 30 in establishments normally employing 300 workers or more,
(ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question;
(b) ‘workers’ representatives’ means the workers’ representatives provided for by the laws or practices of the Member States.
For the purpose of calculating the number of redundancies provided for in the first subparagraph of point (a), terminations of an employment contract which occur on the employer’s initiative for one or more reasons not related to the individual workers concerned shall be assimilated to redundancies, provided that there are at least five redundancies.

Now the panel of the industrial tribunal that was hearing Valerie Lyttle’s case took as its starting point the fact that the EU’s Directive allowed the Member States a choice as to how it was implemented. Namely, Member States could either opt for Article 1.1(a)(i) of the Directive or Article 1.1(a)(ii), and the UK had opted for the latter provision. Equally, it noted that English employment law had already interpreted the ‘English’ option in Article 1.1(a)(ii) the Directive in light of the CJEU’s rulings interpreting Article 1.1(a)(i).

The industrial tribunal then set out the applicable legal framework in its constitutional context. Namely, the UK’s implementation of the Directive made a discrete split inside the applicable legislative framework. That is to say, the UK’s implementation for Great Britain was to be found in sections 188-192 of the Trade Union and Labour Relations (Consolidation) Act 1992; but for Northern Ireland, the implementation was to be done in Northern Ireland’s own legislation, even if that statutory measure mirrored the legislation applicable in Great Britain.

Despite this constitutional intricacy, the implementing legislation was drafted in such a way as to suggest that the duty to consult about the dismissals only applied to redundancies within a particular “establishment”. That is to say, only if 20 or more employees were being made redundant in that particular establishment was there such a duty. And a literal reading of the statutory provision suggested that the claimant’s case was likely to fail.

However, the case really turned on the correct interpretation that was to be given to the word ‘establishment’. There was case law on this point. For even though the industrial tribunals of Northern Ireland had not yet interpreted that word, the equivalent legislation applicable in Great Britain had already been interpreted by the UK’s Employment Appeal Tribunal in MSF v Refuge Assurance Plc (2002 ICR 1365). Furthermore, the word ‘establishment’ had also been interpreted by the CJEU in two judgments: Case C-449/93, Rockfon, and considered further in Case C-270/05, Athinaiki.

Nevertheless, the industrial tribunal felt that even in light of this body of case law, the claimant’s case would probably still fail. The reason was that the shop in which the claimant worked was ‘a local work unit’, and so that was “the establishment” to which she belonged. In that context, the Northern Ireland industrial tribunal recalled the CJEU’s ruling in Case C-270/05, Athinaiki where it had reasoned:

27. Thus, for the purposes of the application of Directive 98/59, an ‘establishment’, in the context of an undertaking, may consist of a distinct entity, having a certain degree of permanence and stability, which is assigned to perform one or more given tasks and which has a workforce, technical means and a certain organisational structure allowing for the accomplishment of those tasks.
28. Given that the objective pursued by Directive 98/59 concerns, in particular, the socio‑economic effects which collective redundancies may have in a given local context and social environment, the entity in question need not have any legal autonomy, nor need it have economic, financial, administrative or technological autonomy, in order to be regarded as an ‘establishment’.
29. It is, moreover, in this spirit that the Court has held that it is not essential, in order for there to be an ‘establishment’, for the unit in question to be endowed with a management which can independently effect collective redundancies (Rockfon, paragraph 34, and point 2 of the operative part). Nor must there be a geographical separation from the other units and facilities of the undertaking.

Thus, the claimant’s case would probably fail.

But it was not certain that the claimant’s case would fail. The doubts of the Northern Ireland industrial tribunal originated in an obiter dictum made in the 2002 case of MSF v Refuge Assurance Plc (mentioned above).

In MSF, the UK’s Employment Appeal Tribunal had implied that the Directive had not been correctly implemented. Indeed, the then President of the UK’s Employment Appeal Tribunal thought the domestic legislation – in requiring a threshold of at least 20 redundancies over 90 days per establishment, as distinct from applying a threshold of 20 persons over 90 days throughout all of the employer’s establishments – was incompatible with the Directive.

The doubts of the Northern Ireland industrial tribunal were fortified by the fact that the self-same doubt as to the correct implementation of the Directive had been voiced again, some 10 years later, in the case of Renfrewshire Council [2012] UKEAT 0018/12.

In Renfrewshire Council, the current President of the Employment Appeal Tribunal, Judge Langstaff, had observed: “… [There] seems to me to be force in the view of the Appeal Tribunal expressed in paragraph 52 in MSF that the Act might not be compatible with the Directive, since the word in s.188 is “establishment”, in the singular, whereas in the Directive it is in the plural – “the establishments in question”’.

The doubts of the Northern Ireland industrial tribunal became ‘overwhelming’ when it was pointed out that the doubts of the Employment Appeal Tribunal were not shared by the relevant Ministry of the UK Government. That is to say, a 2012 Consultation Paper on collective redundancies produced by the Department for Business Innovation and Skills had expressed the belief that the ’20 employees per establishment’ threshold was “… in keeping with the [1998] Directive”.

The conflicting views of the most senior specialist employment court in the United Kingdom on the one hand; and the UK Government, on the other, was an overwhelming reason for the panel of the Northern Ireland Industrial Tribunals hearing Valerie Lyttle’s case to make a reference to the CJEU.

Questions Referred
According to the Curia website, the Industrial Tribunals (Northern Ireland) has asked:

(1) In the context of Article 1(1)(a)(ii) of Council Directive 98/59/EC, does ‘establishment’ have the same meaning as it has in the context of Article 1(1)(a)(i) of that Directive?
(2) If not, can ‘an establishment’, for the purposes of Article 1(1)(a)(ii), be constituted by an organisational sub-unit of an undertaking which consists of or includes more than one local employment unit?
(3) In Article 1(1)(a)(ii) of the Directive, does the phrase ‘at least 20′ refer to the number of dismissals across all of the employer’s establishments, or does it instead refer to the number of dismissals per establishment? (In other words, is the reference to ’20′ a reference to 20 in any particular establishment, or to 20 overall?)