Redundant shop workers suffer European setback

Thousands of shop workers who were made redundant when their employers went bust in the recession have suffered a set-back in their fight for compensation after the European Court of Justice (ECJ) clarified a crucial issue of law in relation to collective redundancies.

The workers lost their jobs when nationwide retailers Woolworths and Ethel Austin became insolvent. Trade union USDAW applied to an Employment Tribunal (ET) for protective awards in favour of its redundant members on the basis that the collective consultation procedure prescribed by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) had not been followed.

That procedure was only triggered if it could be shown, amongst other things, that the number of redundancies was 20 or more 'at one establishment'. The ET made protective awards in respect of some workers, but denied them to about 4,500 others on the basis that fewer than 20 people were employed at the shops where they worked.

In challenging that decision before the Employment Appeal Tribunal, the union argued that the ET had erred in law in treating the workforce at each shop as an independent entity. It was submitted that, in order to give effect to EU Council Directive 98/59EC, which TULRCA is intended to implement, the expression ‘at least 20 at one establishment’ should be interpreted as referring to the number of redundancies across a business as a whole.

The employers appealed to the Court of Appeal, which referred that issue of law to the ECJ for an opinion.

Stressing the need for legislative uniformity across the European Union, the ECJ has ruled that where an undertaking comprises several entities, it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the ‘establishment’, not the business as a whole. The term ‘at least 20’ requires account to be taken of the redundancy dismissals in each establishment considered separately.

It remained for the Court to determine whether the stores could be classified as separate establishments.

Contact: David Hacker