Woolworths Staff Lose Compensation Dispute

The European Court of Justice has recently ruled on the long running legal compensation battle involving Woolworths, and the result is bad news for its ex-employees. The decision means that 3,200 former employees of Woolworths and 1,200 staff at Ethel Austin will not receive any compensation for redundancy following the retail stores closure.

Under UK law, where an employer is proposing to dismiss as redundant 20 or more employees in one business, they must first consult ‘appropriate representatives’ of any employees who may be affected by the proposed dismissals, unless there are special circumstances that mean it is not reasonably practicable to consult. As a result, in 2012, 24,000 former Woolworths staff were awarded compensation worth 60 days’ pay because the stores had been closed without consultation after the business collapsed during the financial crisis of 2008.

The problem remained however for 3,200 former Woolworths workers, who missed out on receiving compensation because they were based in stores employing fewer than 20 staff.

The trade union ‘Usdaw’, who had been providing legal representation for the affected employees, described the verdict as ‘a kick in the teeth’. ‘It is unfair and makes no sense that workers in stores of less than 20 employees were denied compensation, whereas their colleagues in larger stores did qualify for the award. These were mass redundancy situations where one central decision was made to close the whole company down, with no individual analysis of the viability of each store on a case-by-case basis.’

The shadow business secretary, Chuka Umunna, also expressed his disappointment at the verdict: ‘It is grossly unfair that when these businesses went under, some employees got the lifeline of compensation on losing their jobs whilst others did not.’

Whilst the European Court of Justice’s decision has been met with a sizeable amount of controversy and criticism, the news is particularly good for employers, and removes much of the bureaucracy that currently affects business restructuring plans.

If you are involved in an employment dispute, it is vital that you seek independent legal advice at the first available opportunity. At Seatons, our team of highly trained legal professionals have a wealth of experience in employment claims and provide clear, easy to understand legal advice at low sensible fees. For more information, feel free to give us a call on 01536 276300.