We need to close some stores but are concerned about the large payments awarded to former Woolworths staff by an employment tribunal. What should we do?
Administrators appointed in the wake of the Woolworths collapse have been told to pay compensation of £67.8m to 24,000 former employees as a result of their failure to carry out appropriate consultation with unions and staff ahead of the redundancies. “This is a wake-up call for employers,” says Roger Tynan, an employment partner with law firm Maclay, Murray & Spens LLP. “If you are looking to pare down the workforce, you must initiate consultation with unions and other workforce representatives at an early stage.”
The Employment Tribunal ruled that Woolworths’ administrators had failed to comply with its statutory obligations. Where redundancies are anticipated, the overriding principle is that consultation must begin ‘in good time’ and within specific timescales, with a minimum period of 30 days, where it is proposed to dismiss 20-plus members of staff. In cases involving 100-plus employees, a period of 90 days applies.
Current legislation offers a ‘special circumstances’ defence. However, its scope is very limited and, in practice, a gradual run-down of an insolvent business is unlikely to meet the test.
The Government is reviewing whether existing minimum periods should be cut to give employers the opportunity to increase the pace of their decision-making.
Meanwhile, the current minimum periods remain in force.
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