Woolworths staff lose compensation fight in landmark redundancy ruling

• Decision makes store restructures easier for retailers
• ECJ overturns initial tribunal ruling
• 3,200 former Woolworths staff will now miss out on compensation

The landmark ruling will have significant repercussions for the retail industry because it will make restructurings across multiple stores easier.

The European Court of Justice (ECJ) ruling ratifies the UK’s long-held view on the term “establishment” during redundancy procedures.

British retailers will now be entitled to retain the view that collective redundancy procedures are only triggered where an employer proposes 20 or more redundancy dismissals within 90 days at “one establishment”.

It means retailers will not have to enter a collective redundancy process when making more than 20 redundancies if the redundancies are spread across multiple stores.

The ruling stems from an initial employment tribunal involving former Woolworths and Ethel Austin staff and means that 3,200 ex-Woolworths employees will not receive any compensation because they worked at a store that hired fewer than 20 staff.

Taylor Wessing senior employment lawyer Rachel Farr said: “This is good news for employers, especially those that have been taking a more cautious approach and collectively consulting across the business as a whole. 

“Businesses can now look at any planned redundancy in isolation. This means less red tape and will enable employers to carry out restructurings in a more straightforward way.

“However, 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.”