The decision in the recent case involving former employees of Woolworths will have huge implications for businesses across the region.

Following the case, £5 million of compensation has been awarded to a large number of ex-Woolworths staff who had worked in stores with less than 20 members of staff.

The Court found that administrators to Woolworths had failed to properly consult with employees following the collapse of the business in 2008.

Their union brought claims for protective awards, which were successful at the employment tribunal in relation only to those stores which employed 20 or more staff. This was because the tribunal decided that each shop counted as one ‘establishment’.

The union appealed on the basis that this approach is contrary to the Collective Redundancies Directive.

Although the decision has not yet been handed down, solicitors acting on behalf of the union have said that the EAT ruled that the words ‘at one establishment’ must be disregarded for the purposes of any collective redundancy.

This would mean that where a business is considering making 20 or more employees redundant within 90 days, the location at which the employees work is irrelevant.

It may mean that many employers are caught by the requirements to consult for a minimum period of 45 days rather than 30 days (as all potential redundancies will have to be included), or simply to collectively consult at all. Large scale redundancies may become more expensive.

There may be some ways around this decision. For example, businesses may try to keep redundancies down to 20 at a time meaning that rolling restructuring may become even more common. This approach is however likely to lead to employee disillusionment if the programmes appear to be never ending.

Businesses may also find themselves facing arguments as to when the redundancies were ‘proposed’ which leads into difficult territory. There is an argument that this aspect of UK legislation is also incompatible with the directive which requires consultation to begin when redundancies are ‘contemplated’.

The argument is that ‘contemplation’ occurs at an earlier stage than a ‘proposal’.

Although this issue will still be subject to the 90 day period rule, unions will be keen to find avenues to dissuade businesses from trying to circumvent the rules.

* Fergal Dowling, partner and head of employment at Irwin Mitchell in Birmingham.