A landmark legal case involving former employees of failed retailers Woolworths and Ethel Austin has seen payouts totalling £5 million awarded.
Almost 4,500 former members of staff will benefit from the payouts, which have come about following a victory by shopworkers’ union USDAW at the Employment Appeal Tribunal.
The ruling overturns a previous decision which saw staff members employed in stores with less than 20 employees denied redundancy compensation when the branches closed. Administrators working on behalf of both Woolworths and Ethel Austin had failed to consult with staff representatives, leading to the lack of payout for out of work staff. The employees are now entitled to receive ‘protective awards’ following the ruling.
The victory has been hailed as a ‘landmark’ case, with experts warning that the decision could have future ramifications for all firms across the UK, as it also involves the rewriting of UK laws to comply with EU directives.
John Hannett, Usdaw general secretary, told HR Magazine of the decision: “It has corrected the clear injustice of denying compensation to staff purely on the basis of the number of employees at each individual store.
“It did not make sense that staff in Woolworths and Ethel Austin’s smaller shops were not part of the same collective redundancy situation as their colleagues in larger stores”, he added.
Woolworths went into administration in November 2008, with the stores closing in January of the following year, making almost 30,000 workers redundant. Ethel Austin’s head office and distribution centre as well as its 186 stores were closed in November 2011, leading to the redundancy of 1,700 staff.