European Court rules against employees in Woolworths case

The European Court of Justice (ECJ) has ruled against the employees and the union involved in the Woolworths redundancy case.

It’s good news for employers because it could reduce the time they have to spend negotiating collective redundancies in the future.

The case brought into focus the issue of when do employers need to negotiate with trade unions when making redundancies across multiple sites. The law says that if an employer wishes to lay off more than 20 staff within a 90-day period, then it must consult the relevant trade union representatives at least 30 days before the redundancies take place.

The requirement refers to staff being made redundant at one “establishment”. The question the ECJ was required to answer was what constitutes an establishment? Is it the company as a whole or is it each individual site owned by the company.

The question became important because when Woolworths made its workers redundant in 2009, it interpreted an establishment as meaning each individual store. It therefore didn’t consult unions in stores where less than 20 staff were involved.

Staff and their union USDAW argued that establishment should refer to the company as a whole. They took legal action to seek a total of £5m in compensation for the workers affected. Woolworths ceased trading in 2009 so if the claim had succeeded, the compensation bill would have fallen on the taxpayer.

However, the ECJ ruled against the employees. It held that establishment referred to individual sites, not the whole organisation.

The CBI welcomed the decision, saying that it would it reduce the administrative burden on employers making redundancies across different sites.

Please contact Robert Bedford if you would like more information about the issues raised in this article or any aspect of employment law.