Woolworths Stores are Separate Establishments for Collective Redundancy Consultation

An employment tribunal has ruled that each Woolworths store was a separate establishment for collective redundancy consultation purposes, so when administrators made redundancies at stores employing fewer than 20 employees those employees were not entitled to a protective award. 

Where an employer is proposing to make 20 or more redundancies at one establishment within a period of 90 days or less it has a duty to consult representatives of the affected employees.  Failure to do so can result in a protective award of up to 90 days’ pay per affected employee being awarded.  

The key question in the case of USDAW v WW Realisation Ltd (in Liquidation) was whether each separate store was an establishment (as argued by the administrators) or whether the whole of Woolworths’ retail operations should be aggregated to constitute a single establishment (as argued by the unions).  If each store was a separate establishment the duty to consult did not arise in relation to redundancies at stores employing fewer than 20 employees. 

On 27 November 2008 Woolworths went into administration. Initially a buyer was sought for the business but when no purchaser was found all the stores were closed and the staff made redundant. 

The employment tribunal reviewed European case law and went on to decide that each store was a separate establishment.  Each of the stores was a physically distinct premises from each of the other stores.  Each had its own organisation and distinct purpose.  Each employee worked at a particular store – they were not peripatetic.   The employees were more closely aligned to the individual stores where they worked than to some other organisational structure.  Since each separate store was an establishment, the duty to consult did not arise in respect of the redundancies at stores employing fewer than 20 employees. 

As was to be expected, the tribunal rejected the administrators’ argument that the administration meant that there were special circumstances which excused it from its obligation to consult. However, since there had been some attempt at consultation it awarded a protective award of 60 days’ pay per employee, rather than the maximum of 90 days’ pay. 

What amounts to an establishment for collective redundancy consultation purposes will be fact sensitive and so it cannot be assumed that separate shops (or indeed office locations) will always be separate establishments for collective redundancy purposes.  In the past an establishment has been found to be wider than the physical office/branch shop where the employee works - for example a country-wide sales team was found to be one establishment.  The  narrow construction adopted by the tribunal in this case is open to criticism as European case law requires as broad a definition as possible to be given.  It  seems likely that there will be an appeal from the union in view of the number of employees who failed to obtain a protective award but there is no news on this yet.