Administrators failed to follow correct redundancy procedure
Thousands of former Woolworths staff have collectively won £67.8m in compensation after an employment tribunal ruled that the administrators had failed to follow redundancy procedures.
Nearly 30,000 people lost their jobs when the high street retailer went out of business in November 2008 and administrators shut all the shops, offices and warehouses by January 2009.
However, shop workers’ union Usdaw brought a claim for a ‘protective award’ for employees, through the government’s Redundancy Payments Office, after the administrator did not fulfil their legal duty to consult with the union before making redundancies.
Last week, the tribunal awarded Usdaw members 60 days pay, capped at £400 gross pay a week, which is the maximum amount payable for a case like this.
The taxpayer will pick up the tab for compensation as Woolworths was in administration when the redundancies were made.
However, workers employed in a store where 20 or less redundancies were made will not be eligible for the payout because of a legal precedent recognised by the tribunal.
A similar case involving workers made redundant when budget clothing chain Ethel Austin went into administration in 2010 did not award compensation to people who worked in premises where less than 20 redundancies were made.
The precedent means that about 3,000 workers from 180 of the 814 Woolworth sites “may never receive compensation” according to Usdaw. The union said it plans to appeal the decision.
John Gorle, Usdaw national officer said: “While the award is never going to fully compensate people for losing their jobs, I’m sure our members will welcome the money and appreciate the effort the union has made to secure the compensation for them.
“However, I’m once again bitterly disappointed that a tribunal has limited the scope of the award. The fact that some of our members won’t be compensated simply because their store had less than 20 employees is just plain wrong and shows the gaping loophole and injustice of the current legislation.
"Nearly 30,000 employees were made redundant from Woolworths at the same time and for the same reason, so to suggest 3,000 of them didn’t constitute a collective redundancy is a nonsense.”
John Hannett, Usdaw general secretary added: “The UK's current interpretation of the law on collective redundancies is both unfair and possibly a breach of the European Directive which seeks to protect workers in large scale redundancy situations.”
In addition, the shop workers’ union has already made a separate and successful claim for its members formerly employed by Woolworths in Northern Ireland. No employees in Northern Ireland worked in stores with less than 20 staff, therefore everyone received compensation of 60 days pay.
An employer proposing collective redundancies is required to consult in advance with staff representatives and the consultation must be completed before issuing dismissal notices.
Under UK law, the obligation to consult is currently limited to situations where 20 or more employees will be made redundant at one establishment within a 90-day period.