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A2/2013/2098

Neutral Citation Number: [2014] EWCA Civ 142

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

Royal Courts of Justice

Strand

London, WC2A 2LL

Wednesday, 22 January 2014

B e f o r e:

LORD JUSTICE MAURICE KAY

LORD JUSTICE BRIGGS

LADY JUSTICE MACUR

Between:

USDAW AND ANOTHER (Appellant)

v

ETHEL AUSTIN LTD AND OTHERS (Respondent)

DAR Transcript of the Stenograph Notes of WordWave International Limited
A Merrill Communications Company
165 Fleet Street London EC4A 2DY
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(Official Shorthand Writers to the Court)

Mr T Ward QC and Mr Barr (instructed by The Treasury Solicitor) appeared on behalf of the Appellant

Miss D Rose and Mr I Steel (instructed by Slater & Gordon) appeared on behalf of the Respondent

J U D G M E N T (as approved by the court)

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LORD JUSTICE MAURICE KAY: Directive 98/59 EC concerns the approximation of laws of member states relating to collective redundancies. Collective redundancies are defined in Article 1, which gives member states a choice between two definitional models. The United Kingdom has sought to give effect to its obligations under the Directive in section 188 of the Trade Union and Labour Relations Consolidation Act 1992, which adopts the second model.

In the Directive it is prescribed as follows:

"Article 1(a)

'Collective redundancies' means dismissals effected by an employer for one or more reasons not related to the individual workers concerned where ... the number of redundancies is ... (2) over a period of 90 days at least 20, whatever the number of workers normally employed in the establishments in question."

Section 188 of the domestic legislation provides:

"Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals."

The facts of these appeals illustrate the issue raised by them. Both Woolworths and Ethel Austin were companies operating large chains of retail outlets. In both cases the companies became insolvent and went into administration and the employees lost their jobs. The employees with whom we are concerned are members of the trade union USDAW. All the USDAW members who lost their jobs claimed protective awards on the basis of an absence of consultation prior to dismissal. Those working in shops where 20 or more were employed succeeded. In the employment tribunals those working in shops where fewer than 20 were employed failed, because there had not been, "20 or more employees at one establishment within a period of 90 days." They appealed to the Employment Appeal Tribunal.

At the EAT, the employees were legally represented, the former employers were not. The consequence of employees succeeding in obtaining a protective award in relation to an insolvent employer is that ultimately the Secretary of State may have to underwrite their entitlement pursuant to the Employment Rights Act 1996. The Secretary of State was entitled, and indeed encouraged, to be represented at the EAT but choose not to be. The EAT came to the conclusion that section 188 did not give full effect to the Directive, which, it held, permits aggregation between a plurality of "establishments". Accordingly, it approached section 188 by deleting, "at one establishment". The employees therefore won their appeals. If that decision is correct, the Secretary of State will ultimately be liable for the protective awards.

The EAT granted the Secretary of State permission to appeal to this court. Today, we are concerned only with a preliminary issue. It arises in this way: the judgment in the EAT was on 30 May 2013. Unknown to the employees, their legal advisers and the EAT, on 12 April 2013 an industrial tribunal in Northern Ireland, when construing domestic legislation which is in substantially the same terms as section 188, in Lyttle v Bluebird, had referred three questions to the CJEU pursuant to Article 267. We understand that, in accordance with the procedural rules of that court, the general meeting is scheduled next week. Today, neither party is inviting us to deal with the Secretary of State's appeal substantively. The Secretary of State requests us to stay the domestic appeal pending judgment in the CJEU in Lyttle. The employees, on the other hand, ask us to make a reference pursuant to article 267 so as to give the CJEU the opportunity, if it so wishes, to join these cases to Lyttle with a view to producing a single judgment.

We received help in written and oral submissions from both sides. The first issue under article 267 is whether we consider that a decision on particular questions is "necessary to enable" us to give judgment. If it is, we have a discretion to refer. The case for a stay rather than a reference is that a judgment of the CJEU in Lyttle could, but not necessarily would, be effectively dispositive of these domestic appeals, and that it would be wrong to risk a possible delay to the processing of Lyttle at this stage, some 9-months after the reference was made in that case. It is submitted that the test of necessity in article 267 is simply not satisfied.

Absent other features, those submissions might have prevailed. However, there are two features of the present appeals which lead me to the conclusion that the appropriate course is to refer rather than to stay. The first is that in Lyttle the employees do not have the benefit of legal representation in the CJEU on this important issue and in a case which will have consequences across a large swathe of economic activity in member states which have opted for the second model of implementation. We do not know how many have, but in any event the point affects very large numbers in the United Kingdom. The union supporting the employees in the present case also has pending cases relating to at least three other large retail chains.

In the CJEU the date for written pleadings in Lyttle was 29 July 2013. We understand that only the employer, the United Kingdom government, the Commission and the government of Hungary are active in the proceedings. The interest of the employees in that case is not directly represented.

It is not for us to suggest to the CJEU how it should process its cases, but in my view it may well consider that it would be assisted if, on the important point at the heart of this litigation, it had the benefit of legal representation of the interest of the employees supported by a major trade union. I suspect that to proceed to determine the case without such assistance would be considered disadvantageous.

The second reason why I would favour a reference is that, as the judgment on the Lyttle reference as it now stands would not necessarily be dispositive of the present appeals, it may well be that another aspect of them will become important in the domestic court. If it does, it too raises a question which would satisfy the necessity test. That question is whether, in these proceedings, the Secretary of State could rely on the state's failure to implement the directive, if such a failure is established, to defeat the employees' putative claim against him in domestic law.

The submission for the employees on this point, "vertical direct effect", is said to gain support from Foster v British Gas [1990] ECR 13313. The EAT accepted this submission, albeit "with slightly less confidence." In my view, it would be appropriate for this question to be the subject of the reference. It is not currently before the CJEU in the Lyttle case. The Court may take the view that vertical direct effect does not yet arise in this case, but the point is not free from doubt. Accordingly, if my Lord and my Lady agree, I would make a reference in relation to the construction of the Directive and the vertical direct effect point.

I am conscious that there are extreme time pressures. We shall direct that a transcript of the judgments today be expedited and made available to counsel in approved form as soon as possible. We would also invite counsel to submit a draft order and a draft reference for our approval as soon as they can. We can hear them further on logistical matters.

LORD JUSTICE BRIGGS: I agree.

LADY JUSTICE MACUR: I also agree.