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Woolies continues to shake up the retail landscape from beyond the grave

Despite its demise in 2008, Woolworths is at the heart of a landmark legal case this week, which entitles thousands of shopworkers to a £5 million payout. By Gavin Matthews, head of retail at Bond Dickinson.

GENERAL MERCHANDISE

Woolies continues to shake up the retail landscape from beyond the grave

Despite its demise in 2008, Woolworths is at the heart of a landmark legal case this week, which entitles thousands of shopworkers to a £5 million payout. By Gavin Matthews, head of retail at Bond Dickinson.

The Employment Appeal Tribunal decision, announced this week, overturns a previous ruling that said shopworkers employed in stores with fewer than 20 staff were not entitled to a payout. The administrators for Woolworths and Ethel Austin had not consulted properly with the staff’s representatives, which they are obliged to do when employees are about to lose their jobs, but only those employees who worked in a store with at least 20 staff were awarded compensation.

UK regulations provide that the consultation obligations only apply where 20 or more jobs are being lost at one establishment, so it appears that the EAT decided that UK regulations don't interpret EU law correctly.  It is not yet clear exactly what the judges have decided, but as soon as their judgment is available, retailers may have to rethink how they deal with redundancies affecting a number of stores. This major case could change the face of UK redundancy law and it is very important for all retailers, particularly those who may be having to consider larger scale redundancies in the difficult economic climate, to be aware of the ramifications of this ruling.  

Retail employers must now tread very carefully when planning the procedures for redundancy consultations and ensure that they are doing everything possible to avoid ending up in the same position as Woolworths or Ethel Austin. It is not only the cost implications but the potential damage to brand and reputation, if the store is making redundancies in a bid to survive, that could be extremely harmful.

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