Ex-Woolworths and Ethel Austin staff are set to share over £5m after winning a legal case against the Employment Appeal Tribunal.
Shopworkers union Usdaw won the case in a decision which overturns a previous ruling which meant that workers in stores with fewer than 20 staff were denied a payout when administrators failed to consult with staff’s representatives.
The £5m will be shared out across 4,400 workers from Woolworths and Ethel Austin.
Usdaw general secretary John Hannett said: “I am absolutely delighted with this decision. It has corrected the clear injustice of denying compensation to staff purely on the basis of the number of employees at each individual store.
“It did not make sense that staff in Woolworths and Ethel Austin’s smaller shops were not part of the same collective redundancy situation as their colleagues in larger stores.”
“This decision will send a clear message to all employers and administrators that workers should be consulted regardless of whether they work in a small or large workplace.”
Usdaw said it will also press for a change to the law that allows administrators to ignore their consultation obligations to employees when a company goes into administration.
There are currently no consequences for administrators for failing to consult with employees and if subsequently a compensation award is made then the cost is met from the government funded Redundancy Protection Fund.