Following the announcement that Marks & Spencer plans to close 27 of its stores, making 1,230 staff redundant, concerns have been voiced by the GMB union that M&S may attempt to construe the law governing redundancy consultation that would see the consultation period with affected staff cut from 90 days to just 30. The union has reportedly threatened legal action in employment tribunals if M&S attempts this approach.

 

With job cuts predicted in the coming weeks and months, the law on employees' entitlements in a mass redundancy scenario is coming sharply into focus.

 

Where more than 100 employees at a single establishment are to be made redundant within a 90 day period, the employer must consult with the employees' representatives for at least 90 days prior to notice being served of the first dismissal.  If, on the other hand, the number of employees to be made redundant at an establishment is less than 100 but more than 20, the consultation need only last 30 days.

These consultation rights have a direct financial impact on the employees whose jobs are being cut. Employment and pay must continue throughout the period of the statutory consultation so the difference could be two much needed extra pay packets before the dismissal bites.

 

For that reason, the interpretation of the word "establishment" has an impact on both employers and employees.

 

Where redundancies are proposed at a number of different sites, the question of whether each individual site, the company as a whole, or some other sub-category represents a single establishment has come before both UK and European courts.  However no clear overarching principle has emerged.

 

The GMB union is reportedly worried that M&S may attempt to treat each store at which redundancies are to be made as separate "establishments" for the purposes of the legislation, thus making it more likely that the number of proposed job losses may in some instances fall below the requisite threshold of 100 for the extended 90 day consultation requirement.

 

If M&S takes the stance feared by the union, it may try to rely upon the European Rockfon case. Here, the ECJ ruled that notwithstanding the existence of a centralised personnel function covering a number of businesses, each of them could be viewed as a separate establishment since they were otherwise run fairly independently. For a single unit of a business (such as an M&S store perhaps) to be regarded as an establishment, Rockfon suggested it need not have its own management that can independently carry out the redundancies.

 

Although the Rockfon case has on occasion been applied in the UK, a legal challenge by the unions may still be worth pursuing. The way in which European law sets out the thresholds for the length of consultation differs from the UK.  Because of these differences, in other member states it actually favours employees and extends their consultation rights to construe the "establishment" as the smallest possible part of the business in which the redundancies are concentrated.  Whether the European Court of Justice with its purposive tradition would endorse the wholesale extension of the Rockfon principles into British cases like M&S's is therefore open to doubt.