USDAW v WW Realisation 1 Limited (in Liquidation)

You probably wouldn't recognise it from the case name but this case results from the closure of the much loved and sorely missed Woolworths.

Employers are obliged to carry out collective consultation with appropriate representatives when proposing to dismiss 20 or more employees from an establishment over a 90-day period: the length of the consultation period is dependent on the number of employees being dismissed. 

When Woolworths went into administration and no buyer could be found, the decision was taken that all the stores would be closed and the 27,218 employees would all be made redundant. The duty to consult kicked in and collective consultation had to be undertaken. Unfortunately for Woolworths the Employment Tribunal held that, despite Woolworths obviously being in serious financial difficulties at the time and arguing that the administrators were too preoccupied with finding a buyer to carry out proper consultation, they failed in their obligation to consult collectively.

An issue that arose was whether or not all the Woolworths stores counted as one 'establishment'. If all Woolworths' stores were one establishment then Woolworths would have failed to consult with all the employees and the award (known as a protective award and which entitles employees to receive up to 90 days' pay) would cover all redundant staff. However, if Woolworths could show that each store was an individual establishment for the purpose of the legislation, then the employees working at Woolworths' stores where there were fewer than 20 employees would not be caught by the legislation and those employees would not therefore be entitled to the benefit of a protective award.

In reaching their decision about the 'establishment' issue the Tribunal looked at European cases as well as domestic cases. The European Court of Justice (ECJ) held that an 'establishment' means, 'depending on the circumstances, the unit to which the workers made redundant are assigned to carry out their duties'. The ECJ went further and said that an 'establishment' should be interpreted very broadly.

In the UK, 1978 was a big year for the 'establishment' issue: the courts had to decide what an 'establishment' was in a string of redundancy cases. In cases involving bakeries and building sites, only one 'establishment' was found to exist and only one case, involving maintenance depots, bucked the trend with each depot being found to be a separate establishment.

In this case, the Tribunal held that each Woolworths store was a separate establishment. The Tribunal stated that in reaching its decision it found that each store was physically distinct from each of the other stores.  Each store had its own organisation and distinct purpose. Finally, each of the affected employees worked at a particular store; they were not peripatetic. This is perhaps surprising bearing in mind that the stores were unlikely to share accounting and HR functions and in reality were unlikely to be able to operate independently of head office.

In contrast to the Tribunal's usual approach of stretching the protection afforded to employees facing redundancy, no such protection was extended to those Woolworths' employees who worked in the small stores. This case provides some comfort to employers who operate their business over a number of different outlets or sites, but caution must still be exercised when deciding which employees fall within the scope of the duty to consult given the fact sensitive approach adopted by the Tribunal.  It also, of course, represents scant consolation for staff and particularly the staff employed in the smaller Woolworth stores.