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Retales™ - £5m compensation for ex-Woolworths and Ethel Austin staff

Nick Thorpe
04/06/2013

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United Kingdom

Retales™ - £5m compensation for ex-Woolworths and Ethel Austin staff

In a landmark case, the Employment Appeal Tribunal (EAT) has overturned a previous Employment Tribunal decision that denied compensation to ex-employees of Woolworths who had worked in stores with less than 20 members of staff.

Following the collapse of Woolworths in 2008, the appointed administrator failed to consult properly before making employees redundant. The issue in the Employment Tribunal was whether or not collective redundancy consultation was required.

Under UK legislation, the duty to consult collectively about redundancies is only triggered where an employer proposes to dismiss as redundant 20 or more employees at ‘one establishment’ within a period of 90 days or less (from 6 April 2013, where an employer is proposing to dismiss 100 or more employees, the time period for starting collective consultation reduced from 90 to 45 days before the first dismissal takes effect).

The Employment Tribunal held that each individual store amounted to an "establishment" and collective consultation was required for those stores employing 20 or more staff, but not required for those stores employing less than 20. USDAW, the shopworkers union, was therefore successful in securing protective awards for employees that had worked in stores with more than 20 employees.  However, employees that worked in smaller stores with less than 20 employees were not awarded compensation. 

The EAT has overturned this decision. It is understood from statements made by USDAW and their legal advisers that the EAT "ruled that the words “at one establishment” are here and after to be disregarded for the purposes of any collective redundancy involving more than 20 employees, meaning that once it is proposed that more than 20 employees in a single business are to be made redundant, their location becomes irrelevant."

We will have a clearer understanding of the basis of the EAT's decision when the written judgment is released in due course. However, it appears that the EAT has decided that UK rules on collective redundancy consultation are incompatible with the EU directive and therefore need to be re-written with the words "at one establishment" being removed.

Whilst this is a significant victory for USDAW, it is also a landmark decision that will have much wider implications for all employers (not just retailers) with multiple sites across the country.  In effect, if 20 or more employees are affected by a potential redundancy situation, it will not matter if they are based at different sites or locations, an employer will be required to carry out formal collective consultation with appropriate representatives over the relevant time period before implementing the redundancies. 

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