Woolworths redundancy case: European Court of Justice decision good for business, lawyers say

British businesses breathed a sigh of relief this morning after the European Court of Justice ruled in favour of the UK government in the controversial Woolworths redundancy case. 

 

The case dates back to Woolworth's demise in 2008 (and subsequently 2010, when it also affected former Ethel Austin staff), when more than 4,000 employees did not receive protective awards of up to 90 days' pay because they worked in stores where fewer than 20 people were employed.

 

The union Usdaw took the case to the Employment Appeal Tribunal, which decided in 2013 that UK legislation should be rewritten in line with EU principles, so that a given business would be counted as one, rather than carved up on a site-by-site basis.

 

From that point on, businesses have had to collectively consult whenever making 20 or more redundancies. 

 

Today's decision, brought as an appeal by the UK government, paves the way for this to be reversed. 

 

Lawyers told City A.M. it would be a huge relief for business owners, noting that it would cut the time and cost of dealing with redundancies. 

 

Christopher Tutton, employment partner at Irwin Mitchell, said: “We have now gone full circle and re-established the ‘establishment’ test. Although it is not a huge surprise with the court following the guidance from the advocate general in February, it will certainly provide relief for businesses, particularly those with multiple sites, and greater certainty on an already complex area of law.”

 

Louise McCartney, from Bates Wells Braithwaite, said it was “hugely important”. 

 

“This decision makes it far less likely that businesses will be caught by legislation imposing additional costs and burdens, as well as the risk of punitive protective awards,” she added. 

 

David Whincup, partner at Squire Patton Boggs and head of the London employment team, agreed it was welcome news. 

 

“Consider, for example, a fast food chain with hundreds or even thousands of locations across the country, a large multi-national ‘umbrella’ fashion company with a number of brands or divisions within the same group, or even just a relatively small pub chain of two or three locations that is on the brink of bankruptcy and so is looking to change the terms and conditions of employment for their 20 employees – these business would all have been badly prejudiced had the ECJ decided in Usdaw's favour. 

 

“Today’s decision means that if the redundancies are in multiple locations but less than 20 at any one of them, the business will not have to consult collectively on them. This will grant welcome flexibility and save them both time and money.

 

“However, the case is not over – it will now return to the Court of Appeal to decide the outcome in light of the ECJ’s ruling. The HR community will want to keep a close eye on this but it seems most unlikely that the Court will now do anything other than go back to the “per site” construction which had historically been applied.”