Employers welcome European ruling on redundancies

The law on collective redundancies in the UK will revert to a more employer-friendly version, prompting relief from corporate Britain and anguish from trade unions.

The European Court of Justice said on Thursday it did not agree with an employment appeals tribunal decision in 2013 that had upended the law on collective redundancies. Employers complained the decision had made it harder and more costly to restructure their workforces.

Adam Hartley, an employment partner at law firm DLA Piper, said the ECJ judgment meant redundancy consultation periods would now be shorter, more straightforward and less costly for employers.

The CBI business lobby group said it was "a victory for common sense - and will be welcomed by firms right across the UK."

John Hannett, general secretary at the Union of Shop, Distributive and Allied Workers (Usdaw), which was defeated by the ECJ decision, called it "a kick in the teeth".

The case at the heart of the dispute involved about 1,200 former Woolworths and Ethel Austin employees who lost their jobs when the retailers collapsed in the recession.

Since the mid-1970s the law had been interpreted to mean that employers were only required to consult collectively when they planned 20 or more redundancies in a single establishment, such as an office or factory.

Because the Woolworths and Ethel Austin employees worked at stores with fewer than 20 staff, they did not receive compensation for the administrators' failure to consult collectively about the redundancies. The other 25,000 former workers, who worked in larger shops, did receive compensation.

In 2013, the employment appeals tribunal agreed with Usdaw, which fought on behalf of the employees, that the obligation to consult should kick in whenever there were 20 or more lay-offs planned across a whole company.

Rachel Farr, senior employment lawyer at law firm Taylor Wessing, said the ECJ judgment was good news for employers.

"Businesses can now revert to the standard UK approach, which has been taken since the 1970s, and look at any planned redundancy in isolation. This means less red tape and will enable employers to carry out restructurings in a more straightforward way."

Usdaw's Mr Hannett said the Woolworths and Ethel Austin workers were "heartbroken" by the ECJ's decision.

"Our case is morally and logically robust, so today's verdict is a kick in the teeth. It is unfair and makes no sense that workers in stores of fewer than 20 employees were denied compensation, whereas their colleagues in larger stores did qualify for the award," he said.

He said his hopes were now pinned on a Labour victory in next week's election, because the party has promised legislation to equalise the treatment of workers in different sized workplaces in large-scale redundancy situations.

Mike Cain, a lawyer at Leigh Day who acted for Usdaw at the time of the ECJ hearing, said the judgment meant the UK would probably now return to "the most atomised approach to worker rights in the EU, allowing employers and more crucially administrators to legally ignore, if they wish, the plight and anxieties of potentially thousands of employees trapped in a future nationwide redundancy".

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