Retales™ - Compensation for ex-Woolworths staff - EAT grants leave to appeal

As a number of retailers continue to face administration, the retail sector faces fresh challenges in relation to the failure to consult over collective redundancies.

We reported back in January that the shopworkers union Usdaw won compensation of up to £67.8 million for over 24,000 former Woolworths employees made redundant when the retailer collapsed in 2008. Usdaw succeeded at Employment Tribunal in its claim that the administrators had failed in their duty to consult collectively before making redundancies.

Not all employees were awarded compensation. As the duty to consult collectively about redundancies is triggered where an employer is proposing to dismiss as redundant 20 or more employees at 'one establishment' within a period of 90 days or less, Usdaw was unsuccessful in its attempts to get protective awards for employees employed at stores with less than 20 staff.

However, the Employment Appeal Tribunal (EAT) has now granted Usdaw leave to move to a full hearing, on the basis that the union did have an arguable case. The full hearing is likely to take place in spring 2013.

The Tribunal's decision in this case accorded with both case law and the general approach taken by most retailers to the 'establishment' test. It remains to be seen how the EAT will tackle Usdaw's appeal. If successful, it would have wide ranging practical and financial implications, extending beyond the retail sector, and would alter the way in which collective redundancy consultation is undertaken.

We will be tracking this case closely and will provide further updates on this case on our Employment Law Blog. For further advice on collective redundancy consultation or any other retail employment issue, please contact Nick Thorpe, Partner Employment and Pensions Group.