Former Woolworths employees lose claim for compensation

Thousands of former workers with the high street retailers Woolworths and Ethel Austin have lost their long battle for compensation.

Following a decision by the European Court of Justice (ECJ, 3,200 ex-employees of Woolworths and 1,200 former staff at Ethel Austin who missed out on a payout following the firms’ collapse will not be entitled to any money.

In 2012, 24,000 former Woolworths staff were awarded compensation equivalent to 60 days’ pay. This was due to the fact that stores had been closed without the correct consultation taking place.

However a number of employers did not receive any funds as they were employed in stores with fewer than 20 employees and so were not covered by the protective awards made by an employment tribunal in relation to other staff.

The case rested on the question of whether stores with fewer than 20 staff could be considered separate ‘establishments’. In this case, under UK law, there would be no requirement for consultation to take place.

The government won the right to take the case to the ECJ after a previous Employment Appeal Tribunal (EAT) had found in favour of the employees union, USDAW, who has taken the case on their behalf. The EAT decision was that collective redundancies did not need to be at one ‘establishment’, in effect placing on employers the requirement to consult with all employees within a business regardless of the size of the individual site at which they work.

The ECJ judgement is being seen as good news for employers who will no longer be obliged to take part in collective consultations across their whole business.

However Rachel Farr, senior employment lawyer at international law firm Taylor Wessing, said “Employers cannot always say that different sites are different establishments, as this will depend on all the facts in each case – for example, whether the sites are centrally managed. It will be for the UK courts in each case to determine whether different stores are different establishments.”

Usdaw’s general secretary, John Hannett, called the decision “a kick in the teeth” he added that it made “no sense that workers in stores of less than 20 employees were denied compensation, whereas their colleagues in larger stores did qualify for the award.”

There are now calls for the law to be changed so that all employees within a business are treated the same regardless of whereabouts they are based.