The European Court has ruled that the former Woolworths and Ethel Austin employees will not receive compensation from their redundancies because they worked in stores with fewer than 20 staff. This decision has not come as much of a surprise among employment law specialists, but many believe that trails to the decision of redundancy calculations will reveal whether a review of policies needs to be made.

Beverley Sunderland, managing director of Crossland employment Solicitors feels that the European Court’s decision is a welcomed one and is the best outcome for both employers and employees. She says:

“Today’s decision by The European Court of Justice (‘ECJ’) in the ‘Woolworths’ case is good news for employers and 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.

“However, as regards the dismissals at issue, the Court observes that, since those involved in the case were effected within two large retail groups situated in different UK locations, employing in most cases fewer than 20 employees, the first-instance tribunals took the view that the stores (to which the employees affected by those dismissals) were separate ‘establishments.’ It is for the Court of Appeal to establish whether the stores can be classified as separate ‘establishments’.

“What would have been helpful is more of a steer from the ECJ as to what is meant by one ‘establishment’ so employers do not inadvertently consider workplaces separately.  A general steer is that if they are stand–alone workplaces, with their own accounting and management and cost centres and the employees are assigned to work there, it is likely to be a separate establishment. But it does pay to look carefully at the structure.”

Tina Wisener of Doyle Clayton, a specialist employment law firm, believes that the way employers will now be able to calculate their redundancies is not clear. She says:

“The European Court’s ruling means that employers are allowed to calculate the number of redundancies they are proposing to make at each establishment in order to work out whether collective redundancy consultation obligations are triggered.  Aggregating dismissals across all establishments is not required.

“But what constitutes an establishment for these purposes?  The European Court said it’s the employment unit to which the workers made redundant are assigned to carry out their duties.

“In the case of multi-site employers, an establishment won’t be the whole of the employer’s business, but it can be wider than one particular work place.   And what’s more it doesn’t have to be a physical work place either.”

Read more comments in part 2 here.