Woolworths redundancy case: Comments from the community – Part 2

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This is the second part of a community comments post regarding the European Court judgement over the Woolworths and Ethel Austin employees. You can read part 1 here.

Katja Hall, CBI deputy director-general, believes that the decision made has been the right one. She say:

“This is a victory for common sense – and will be welcomed by firms right across the UK.

“The case has dragged on for nearly two years – and the uncertainty caused has created additional and costly burdens for British businesses. This decision has given certainty to the law and restored consultation to genuine cases of collective redundancy.

“The Government was right to heed our advice and appeal the original judgement.”

Christopher Tutton, employment partner at Irwin Mitchell, thinks that while employers will feel some comfort from the decision in the meantime, a review of policy law surrounding redundancy will be a welcomed one. He says:

“We have now gone full circle and re-established the ‘establishment’ test. Although it is not a huge surprise with the Court following the guidance from the Advocate General in February, it will certainly provide relief for businesses, particularly those with multiple sites, and greater certainty on an already complex area of law.

“Last month, the Insolvency Service published a call for evidence on the collective redundancy rules for employers facing insolvency. Although the Woolworths decision has provided some comfort for business owners in the meantime, a wider policy review on this area of law will be welcome.”

Richard Hodgson, Linklaters restructuring & insolvency partner, thinks the decision will make decisions on the redundancy process easier within companies but may become complicated with multiple establishments. He says:

“Retail sector insolvencies such as Woolworths often involve small numbers of redundancies at a large number of locations across the country.  The European Court has supported the principle that collective consultation is only required at locations where 20 or more employees are at risk of redundancy.  This will make organising and operating a collective redundancy process significantly easier.  However, it may still be the case that where stores are closely connected (either geographically or operationally), they may be treated as being a single “establishment” for these purposes, and the collective consultation obligation will therefore still need to be carefully assessed on the specific facts.”

Simon Kerr-Davis, Linklaters employment counsel, the ruling will reveal whether decision within companies will need to be made collectively or on a separate basis. He says:

“The benefits of consulting with workers affected by redundancy plans as a group are much reduced where those workers do not actually work together, but work at different locations.  This decision recognises that the tests for whether collective consultation is required should be looked at on a location by location basis, not at the employer’s entire business.”

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