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Landmark ruling to impact on employers with multiple sites

5th June, 2013

Thousands of former workers of Ethel Austin and Woolworths have won a landmark case in the Employment Appeal Tribunal, entitling them to a share of more than £5 million in redundancy payments. Around 4,400 workers will now benefit from this ruling.

UK legislation which requires employers to collectively consult with its employees where 20 or more redundancies are being made at one establishment within a period of 90 days was challenged in the Employment Tribunal by trade union USDAW. A key issue was the concept of an “establishment” for the purposes of determining whether the duty to consult was triggered. It was argued that the EU Collective Redundancy Directive refers to 20 or more redundancies at “establishments” rather than the singular “establishment” within a period of 90 days. Union and employee representatives argued that the whole of Woolworths’ sites nationwide should be seen as a single establishment and that collective consultation was required where 20 or more employees are being made redundant in total across all the employer’s sites. The Employment Tribunal disagreed and held that each individual store was an establishment.

The Employment Tribunal held that there was a “substantial serious failure” by Woolworths to comply with its collective consultation duties when it made its employees redundant. The Tribunal awarded protective awards of 60 days gross pay rather than the maximum of 90 days to over 24,000 employees as some consultation had been undertaken. However, the protective awards expressly excluded those employees who were working in a site with fewer than 20 employees. This meant that around 3,000 employees missed out on payments.

In a landmark ruling, the Employment Appeal Tribunal has now held that the shop workers of the smaller stores (i.e. those with 20 or fewer employees) should have also been entitled to protective awards. USDAW has said that around 3,200 former Woolworths’ employees will be entitled to up to 8 weeks pay and 1,200 former Ethel Austin employees will receive up to 12 weeks pay.

General Secretary John Hannett commented, “this decision will send a clear message to all employers and administrators that workers should be consulted regardless of whether they work in a small or large workplace.”

For further advice or information in relation to your consultation obligations when making redundancies, please contact Helen Watson on 01244 405565 or send an email to [email protected]

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