The Court of Justice of the European Union (CJEU) has today rejected Usdaw’s (the UK shop workers union) case for Woolworths and Ethel Austin members in stores of less than 20 employees to be included in the protective awards against both companies. With the fight being over for Woolworths and Ethel Austin workers, Usdaw is now turning its attention to seeking a change in the law to protect future redundant workers from suffering the same injustice.
John Hannett – Usdaw General Secretary says: ‘This decision marks the end of the road for our members from Woolworths and Ethel Austin seeking justice and they are heartbroken by today’s verdict.
‘Our case is morally and logically robust, so today’s verdict is 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 companies, through their administrators, have already been shown to have acted illegally by failing to consult about the redundancies with the workforce and their trade union Usdaw. A protective award was made by an employment tribunal and workers in stores of over 20 staff were paid years ago and we’ve since been seeking justice for the staff in stores of less than 20 employees.
‘There has to be questions asked about the conduct of Government Ministers – having sided with administrators, who acted illegally, against the best interests of hard-working, loyal and low-paid staff, by pursuing this case to the highest available court. They could have simply accepted the decision of the Employment Appeal Tribunal and justice would have been served.
‘We can now only pin our hopes on the election of a Labour Government to prevent this happening again to other workers in small stores who are made redundant without proper consultation. Only Labour has pledged legislation so that in large-scale redundancy situations, workers from all workplaces affected will be treated as part of the same consultation, in line with the EAT decision on Woolworths and Ethel Austin.’
The case was heard by the CJEU in Luxembourg on 20th November, in a conflated hearing with the Lyttle case from Northern Ireland and Rabal case from Spain and has wider implications for workers made redundant in Comet, Jessops, and Phones-4-U.
Background
In January 2012 Usdaw won compensation worth tens of millions of pounds for 25,000 former employees of both companies, but around 1,200 former employees of Ethel Austin and 3,200 former employees of Woolworths were denied compensation because they worked in stores with fewer than 20 staff.
The decision to deny compensation to staff who worked in smaller shops was based on the interpretation of UK law and it was greeted with outrage by former employees, customers, politicians and sections of the media. Usdaw fought the clear injustice of this decision.
Against this background, in May 2013 Usdaw won a landmark legal case at the Employment Appeal Tribunal (EAT) that should have seen those excluded staff back into the compensation scheme. This ruling not only meant that those excluded staff at Woolworths and Ethel Austin would have been entitled to the compensation received by employees from bigger stores, but that the law would be changed permanently in the same circumstances for all future workers from small stores.
Despite the Government’s failure to attend the EAT hearing they sought leave to appeal the decision, which was granted on 10th September 2013. The Government apologised to the EAT for their non-attendance at the original hearing and the Government were ordered to pay Usdaw’s full costs for the forthcoming appeal. The Court of Appeal decided on 21 January 2014 to refer the matter straight to the Court of Justice of the European Union.
An employer proposing to make collective redundancies in the UK is required to consult in advance with representatives of the affected employees and the consultation must be completed before any notices of dismissal are issued. A complaint of failure to consult may be made to an employment tribunal and if upheld, the tribunal can make a Protective Award. Before this ruling the interpretation of UK law was that the obligation to consult was limited to situations where 20 or more employees are to be made redundant at one establishment within a 90-day period. In the Ethel Austin and Woolworths cases, each store or workplace was regarded as a separate ‘establishment’.
Between 10th February 2010 and 11 April 2010, administrators MCR closed Ethel Austin’s Head Office and Distribution Centre in Knowsley and 186 stores located throughout the country. In November 2011, Usdaw won a Protective Award for its members after an Employment Tribunal found that MCR had failed in its statutory duty to consult with Usdaw before making the redundancies. The Tribunal limited the award, which was worth eight weeks pay, to workplaces where 20 or more redundancies were made. As a result, only staff who worked at the company’s Head Office and Distribution Centre and one store in Edgware, London actually received the award.
Woolworths went into administration on 27th November 2008 and by early January 2009 the administrators Deloitte had closed all of Woolworths stores, offices and distribution centres and made nearly 30,000 people redundant. In January 2012, Usdaw won a Protective Award for over 24,000 former employees of Woolworths after an Employment Tribunal found that Deloitte had failed in its statutory duty to consult with Usdaw before making the redundancies.
Once again the award, worth eight weeks pay, was limited to workplaces where 20 or more redundancies were made. As a result, around 3,200 employees who worked in 180 of Woolworths 814 stores were denied compensation.
Usdaw successfully appealed the decision of both Employment Tribunals to limit the awards to workplaces where 20 or more redundancies were made and the two cases were subsequently combined as they concern the same point of law. BIS did not attend or give evidence to the appeal, even though they were named as correspondents along with the administrators. Only after the appeal ruling was announced did BIS engage and they decided to appeal the appeal ruling. The transcript of proceedings, judgment and directions hearing can be found at: bit.ly/1eICOgd
The Court of Appeal immediately referred the case to the Court of Justice of the European Union in Luxembourg, which was heard on 20 November and was in a conflated hearing with the Lyttle case from Northern Ireland and Rabal case from Spain.
