Nearly 3,500 former employees of Woolworths and Ethel Austin look likely to to lose their battle for compensation after a ruling at the European court of justice.
The majority of former staff at Woolworths and Ethel Austin won compensation from the government in 2012 after a tribunal found that the two companies had failed to consult properly before making mass redundancies after their collapse.
But under UK law, those working in individual shops or offices with less than 20 employees were excluded from the obligation to consult and so were not entitled to compensation.
Legal action by the shopworkers union, Usdaw, led to an employment appeal tribunal ruling that staff from small establishments should be entitled to compensation and UK law should change. But the government appealed, leading to a referral to the court of justice.
On Thursday an opinion delivered by the advocate general, Nils Wahl, backed the UK government. That opinion does not have to be followed by the court, which will give its final ruling at a later date, but lawyers say a change of tack is unusual.
John Hannett, general secretary of Usdaw, described Wahl’s ruling as disappointing. “It 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,” he said.B
ut corporate lawyers welcomed the ruling. David Whincup, a partner at Squire Patton Boggs, said: “The advocate general’s decision in ensuring that the definition of ‘one establishment’ is left to national courts will be a relief to UK businesses that require flexibility across their company, particularly in times of economic turbulence.”
