Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 purportedly implements the requirements of the Collective Redundancies Directive (98/59/EC) (the Directive) (section 188) (see box "Consultation requirements").

The Directive gives EU member states the option of choosing one of two definitions of collective redundancy for consultation purposes. The second option, chosen by the UK and subsequently purported to be transposed into the language of section 188, is: the dismissal, over a period of 90 days, of at least 20 workers, whatever the number of workers normally employed in the establishments in question (Article 1(1)(a)(ii), the Directive).

Section 188 does not replicate this wording. This discrepancy was the key issue in Woolworths.

In 2008 and 2010 respectively, the retail chains of Woolworths plc and Ethel Austin went into liquidation. Several thousand employees lost their jobs as a result. The union representatives brought claims for a failure by the administrators to inform and consult collectively on the redundancies. An employment tribunal upheld the claims and made maximum protective awards of 90-days' pay in respect of the Austin employees, and 60 days' pay for the Woolworths employees.

When assessing who was entitled to those payments, the tribunal took the view that each individual store constituted an establishment, and so the administrators had not been required to inform or consult at those establishments where fewer than 20 employees were based. The effect of the tribunal's judgment was to exclude a total of some 4,400 workers from entitlement to a protective award. The union appealed.

The EAT agreed with the union that the wording of section 188 differed in significant respects to the wording of the Directive. In particular, the second option in the Directive simply required employers to consult collectively as soon as 20 employees were to be made redundant within the relevant period in "whatever" establishment they worked. The limitation in section 188 to dismissals at one establishment was therefore more restrictive than the Directive.

The issue then was whether the EAT could give section 188 a purposive interpretation, so as to be compliant with the Directive. In MSF v Refuge Assurance, the EAT had held that section 188 was so different to the Directive as to be "irremediable by construction", so that all the EAT felt it could do was to apply a straightforward construction of the language ([2002] IRLR 324). Similarly, in Renfrewshire Council v Educational Institute of Scotland, the EAT expressed the view that there was "force" in the argument that section 188 was not compatible with the Directive, but felt bound to follow the approach in MSF (UKEATS/0018/12; www.practicallaw.com/1-522-6079).

In Woolworths, the EAT did not feel so constrained. The EAT relied on Ghaidan v Godin-Mendoza, where the House of Lords held that words could be added or taken away from domestic legislation where this was to "comply with higher purposes" ([2004] UKHL 30).

A review of Hansard revealed that the limitation of collective consultation obligations to one establishment had not featured in the government debates on the implementation of section 188. By contrast, the clear intention of Parliament had been to implement the Directive correctly. The EAT was satisfied that the government had not been entitled, and indeed had not intended, to dilute the protection offered to employees by the Directive.

The EAT held that the authorities had moved on since MSF, and that it was entitled to interpret section 188 so as to be compliant with the Directive.

The EAT went on to find that deletion of the words "at one establishment" from section 188 achieved the necessary result clearly and simply.

An appeal from this decision is thought unlikely. There are therefore currently conflicting EAT decisions on how section 188 is to be interpreted. Arguably, Woolworths is the most authoritative, being not just the most recent judgment, but also because the EAT expressly considered, and rejected, the approach taken in earlier cases.

It is possible that a future EAT may find that the earlier cases were correct. Woolworths could be attacked either on the basis that the EAT went beyond its powers in rewriting section 188 and/or that the wide interpretation given by the EAT to the meaning of the second option in the Directive is wrong.

There has been no ruling to date on what the wording in the second option actually means. However, an industrial tribunal in Northern Ireland has recently referred a number of questions on the correct interpretation of "establishment" to the European Court of Justice (ECJ), including how the term as it appears in the second option should be interpreted (Lyttle v Bluebird UK Bidco 2 Ltd, C-182/13). The ECJ ruling should therefore provide welcome clarity.

The EAT's judgment requires employers, at least for the time being, to consult collectively where 20 or more employees are to be made redundant within a 90-day period across the business, irrespective of where the employees work. This will amount to a significant change to current practice for many employers. It could mean that the collective consultation obligations are triggered in circumstances where they would not previously have been triggered at all and/or that the minimum 45-day period (as opposed to 30 days), is triggered more frequently.

Employers can at least take some comfort that it is no longer a 90-day period that would be triggered for larger redundancy programmes, although the maximum protective award for a failure to inform and consult remains at 90-days' pay.

Woolworths will affect not just present and future collective redundancy programmes, but also those recently completed. Employers that did not consult with employees across all establishments, in reliance on section 188, can probably do little at this stage other than wait to see whether claims are submitted. Protective award claims must be submitted within three months of the last dismissal taking effect (subject to a tribunal's discretion to admit late claims). It is unlikely to be a defence for employers to argue that the lack of consultation flowed from a legitimate approach to the establishment issue, which was in line with case law and/or government guidance.

Employers in this position should assess the risk of claims. Where redundant employees have signed compromise agreements, this will reduce the risk of claims in practice, although claims for protective awards cannot technically be waived using a compromise agreement.

Where trade union or employee representatives have conducted a collective consultation, any protective award claims must be brought by those representatives, not individual employees. Where a risk of claims is considered to be high, employers could take a proactive approach and discuss a future consultation strategy with the representatives, perhaps in return for their agreement not to pursue claims arising from the recent redundancy programme.

Woolworths represents a significant shift in the law on collective redundancy consultation. Only a bold employer will ignore its implications.

Since this article was written, it has been confirmed that permission to appeal the Woolworths decision to the Court of Appeal has been sought by the Secretary of State. If permission is granted and an appeal lodged, it will be some time before a judgment is given. In the meantime, the EAT's judgment remains the leading authority (subject to the comments made above).