The case focuses on former employees at Woolworths and Ethel Austin who lost their jobs in 2008 and 2010 respectively, but were not collectively consulted by the Administrators.
Unions acting for the affected staff brought claims in the Employment Tribunal for protective awards. However, over 3,000 staff who worked at smaller Woolworths stores and 1,200 former employees of Ethel Austin did not receive these awards at the initial Employment Tribunal in 2010, whilst former employees who worked in larger shops did.
This was because the Tribunal decided each individual shop counted as one ‘establishment’ and under UK law, these employees were excluded from the obligation to consult and so were not entitled to compensation.
The USDAW union successfully appealed to the Employment Appeal Tribunal (EAT) but following an intervention from the UK Government, the case was then heard last November by the Court of Appeal and referred straight to the Court of Justice of the European Union (CJEU).
The final CJEU decision will impact on future large scale redundancy processes and will have wider implications for workers who have recently been made redundant.
In February this year, the Advocate General provided his guidance on the case ahead of the definitive ruling on Thursday.
The Advocate General, Nils Wahl, backed the UK Government and said that UK law and the interpretation of the European Collective Redundancy Directive are compatible.
If the CJEU followed these recommendations, it would result in less costly collective redundancy rules whereby companies do not have to automatically consult with staff in a particular establishment if they number fewer than 20.
Christopher Tutton, Employment partner at Irwin Mitchell, said: “Businesses saw some light at the end of the tunnel earlier this year when the Advocate General announced his recommendations. However, the outcome remains uncertain and employers will be very focussed on the actual court decision.
“The direction of travel appears to be back towards where we were before the recession, but it will still of course be interesting to see the exact details of the obligations that will be placed on organisations that need to restructure their businesses in the future.
“We do hope that the CJEU will follow the Advocate General’s opinion. Businesses need to know where they stand and the situation has been wholly unsatisfactory, not least because the risk of getting the process wrong can expose companies to protective awards running into hundreds of thousands of pounds.”