Comment: reprieve for multi-site retailers as Woolworths case is overturned
Multi-site retailers will be breathing a sigh of relief as there should now be clarity on what is expected of the employer when redundancies or change programmes affect a number of geographically disparate business units… by Gavin Matthews, head of retail at Bond Dickinson.
The Woolworths case that was heard in the European Court of Justice dates back to 2008 when the retailer was one of the first iconic high street victims of the financial crash. When the retailer collapsed, more than 4,000 employees did not receive protective awards of up to 90 days’ pay. This was due to the fact that the law stated that such awards were only due in workplaces in which at least 20 people were impacted.
The union USDAW, which has more than 432,000 members nationwide, took the case to the Employment Appeal Tribunal, which decided in 2013 that UK legislation should be rewritten in line with EU principles. This would mean that a business would be counted as one entity, rather than as a collective of stores dotted around the country.
The key point of contention was the trigger point for collective redundancy consultation, which was of particular concern for retailers. The previous ruling meant that multiple small redundancy decisions had to be aggregated in one. Collective consultation then had to take place in a disparate process which had had little practical benefit for those employees involved.
The inevitable consequence of the European Court’s view is that only those Woolworths’ employees who worked in the larger stores were entitled to compensation for the administrators’ failure to properly consult the workforce on the closure of the business.
It opposed the Employment Appeal Tribunal’s decision that ‘establishment’ should be interpreted as meaning the business as a whole. Circumstances depending, this ruling means that multi-site employers will only need to count employees to be dismissed in each single business unit such as a shop or branch of the company to determine whether the 20 employee threshold is met to trigger the obligation to collectively consult. This ‘store by store’ approach will aid more focused decision-making and enable employers to work closely with the local branch affected.
USDAW has pinned its hopes on the election of a Labour Government to bring forward legislation so that in large-scale redundancy situations, workers from all workplaces affected will be treated as part of the same consultation, in line with the EAT decision on Woolworths and Ethel Austin.
While the case now goes back to the Court of Appeal for a final ruling on whether the stores were ‘separate establishments’, it is extremely likely that the court will agree with the original employment tribunal that they are. This will come as a welcome relief for employers.
