Eversheds comment: Woolworths’ legal appeal could impact all UK employers

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In January this year an employment tribunal awarded over £68 million (as reported by the shop workers’ trade union USDAW) in respect of thousands of former employees of Woolworths. This followed a failure to consult those employees in advance of their redundancies when the company went into administration in 2008.

Trade unions acting for former Woolworths’ employees are before the Employment Appeal Tribunal in a bid to appeal some aspects of the tribunal’s decision. Earlier this year USDAW stated their intention to appeal that part of the decision which denied compensation to former employees working at stores with fewer than 20 employees. Martin Warren, Head of Employment at global law firm Eversheds comments:

“Employers, especially retailers, will be watching closely whether the unions are successful in their bid to take an appeal to the Employment Appeal Tribunal. For the sake of legal certainty, it is hoped that the appeal tribunal refuses the unions’ application, endorsing the approach taken by the employment tribunal which applied existing case law in reaching its decision.

Above all, many will hope that the EAT resists any request by the trade unions to make a reference to the European Court of Justice to provide guidance on the compatibility of UK and EU law in this area. Given that such references take months, if not years, to reach a conclusion, it risks de-stabilising redundancy law at a time when businesses are being forced to make staff cuts and others are on the edge of administration.

“The duty to consult collectively employee representatives in large-scale redundancies is triggered when the employer is proposing to dismiss as redundant 20 or more employees at one establishment over a certain timeframe. The question arises as to the correct definition of an “establishment”.

Is it, at one extreme, a shop, office or similar single location, or at the other, a division of a company or the entire company’s operation? In the Woolworths case, the claimants argued for the latter, broader interpretation which would have resulted in more employees being entitled to compensation. However, the tribunal followed a line of previous UK and EU cases and decided upon the former – with the result that employees at small shops were not entitled to compensation.”

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