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INSIGHT: Woolworths Ruling Ends Confusion About The Definition of Establishment

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After months of speculation, the recent ruling by the European Court of Justice rejecting a claim for collective redundancy from former Woolworths’ employees has ended significant unease in the retail sector. Susan Mayall, head of employment at Pearson, explains.

The European Court of Justice has ruled that the term 'establishment' in collective redundancy legislation refers to the specific workplace where an employee carried out their duties rather than the employer as a whole.

In the Woolworths case, this means that former employees who worked in stores with a staff of 20 or less did not have the right to collective redundancy consultations prior to being made redundant.

For the retail sector and any other industries where a large workforce is fragmented over a number of sites, the ruling means that there is no longer a threat of litigation for damages due to a lack of collective redundancy consultation. However, employers should be mindful of the fact that employees can still sue for unfair dismissal citing lack of consultation.

Collective consultation is mandatory for workplaces where 20 or more redundancies are proposed within a 90-day period and this obligation still stands where all 20+ people are based on a single site. However, the ruling clarifies that the legislation does not apply to employees based over multiple sites, which will deliver huge financial and administrative savings for companies in terms of both consultation and remove the risk of litigation in respect of a protective award.

It will come as a blow to USDAW, the shop workers union, which backed the case of former Woolworths and Ethel Austin employees. But for both employers and the legal profession, it finally clears up the considerable confusion surrounding this issue.

For more information or guidance on employment issues, please contact Susan Mayall on 0161 638 3977 or email susan.mayall@pearsonlegal.co.uk.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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