ECJ rejects redundancy claims from former Woolworths and Ethel Austin staff

The European Court of Justice (ECJ) has today handed down its judgment in the long-awaited 'Woolworths case', which concerned the trigger point for collective redundancy consultation.

The decision in USDAW v Ethel Austin Ltd (in administration) and Others confirmed that the ECJ is accepting the advice of its advocate general on the question of when collective consultation for redundancy is triggered.

The court accepted the UK government's appeal that stores with fewer than 20 employees are excluded from an obligation to consult over redundancies and do not qualify for compensation, meaning it was not acting contrary to EU law.

The ruling, which overturns the finding of an employment tribunal, means that 3,200 former Woolworths workers who were made redundant, as well as 1,200 ex-workers at clothing chain Ethel Austin, will not be in line to receive compensation.

USDAW, the shop workers' union, has been seeking compensation for its members since Woolworths spectacularly collapsed in 2008. Lawyers have said the judgment is good news for both employers and employees.

Commenting on the ruling, Christina Tolvas-Vincent, a partner and employment expert at Bond Dickinson, said that businesses will be breathing a sigh of relief, with the court providing clarity on what is expected of an employer when redundancies or change programmes affect a number of geographically disparate business units.

'The [ECJ] has suggested that Woolworths' administrators were right to treat each of the company's stores as separate establishments when consulting its 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.'

Tolvas-Vincent added that while the case now goes back to the Court of Appeal for a final ruling on whether the stores were 'separate establishments', it is likely that the court will agree with the original employment tribunal that they are.

Beverley Sunderland, managing director of Crossland Employment Solicitors, added that the ECJ ruling was also 'good news' for employees.

'Obliging employers to count redundancies across the whole company - when deciding if there are 20 or more in a 90 day period - was not only an administrative nightmare, but it also deprived employees of the opportunity to talk at local level about changes which could potentially affect them.'

 

John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD