Former Woolworths staff to be paid millions in compensation after employment tribunal victory

Average payouts for workers made redundant by Woolworths will be about �2,800. Picture: Julie Bull
Average payouts for workers made redundant by Woolworths will be about �2,800. Picture: Julie Bull
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MORE than 24,000 former employees of the defunct high street retailer Woolworths have been awarded up to £67.8 million in compensation, ending a three year battle following its closure.

The workers who were made redundant when the chain collapsed in 2008 will be awarded 60 days’ pay.

The closure of 81 stores in Scotland over ten days left around 2,500 staff unemployed. The average pay out is expected to be about £2,800.

The shop workers’ union Usdaw said it won the compensation following an employment tribunal, where it was claimed that the administrators Deloitte had failed in their legal duty to consult with the union before making redundancies.

However, the compensation will not apply to 3,000 former employees who worked in smaller branches where fewer than 20 redundancies were made, the spokesman added.

This will account for 180 of the 807 stores which closed between December 2008 and January 2009 and is expected to impact on former staff of stores north of the border.

Because the defunct chain was in administration at the time of the redundancies, responsibility for the compensation payments rests with the taxpayer through the Government’s Redundancy Payments Office.

John Gorle, Usdaw national officer said: “While the award is never going to fully compensate people for losing their jobs, I’m sure our members will welcome the money and appreciate the effort Usdaw has made to secure the compensation for them.

“Cases like this once again demonstrate the immense value of belonging to a trade union.”

“However, I’m once again bitterly disappointed that a tribunal has limited the scope of the award.

“The fact that some of our members won’t be compensated simply because their store had less than 20 employees is just plain wrong and shows the gaping loophole and injustice of the current legislation.”

Gorle said that almost 30,000 employees were made redundant from Woolworths at the same time and for the same reason, “so to suggest 3,000 of them didn’t constitute a collective redundancy is a nonsense”.

Usdaw general secretary John Hannett added: “My delight at the award for the vast majority of our members is tempered by the clear injustice that workers in smaller stores could miss out.

“Usdaw thinks that the UK’s current interpretation of the law on collective redundancies is both unfair and possibly a breach of the European Directive which seeks to protect workers in large scale redundancy situations.

“We are taking further expert legal advice and it is highly likely we will appeal against this part of the judgment.”

Deloitte has not yet made any comment on the resolution of the case.

The Insolvency Service – of which the Redundancy Payments Service (RPS) forms part – said it had been notified of the ruling.

A spokesman said: “The RPS will now determine who is eligible to receive the award. All eligible claimants will receive their claim forms by the end of February 2012.

“People should phone the insolvency inquiry line only if they want to report change of address details.”

The RPS aims to pay more than 80 per cent of claims within three weeks of receipt of the claim and 93 per cent of claims within six weeks.

The collapse of Woolworths had a significant impact on high streets across the UK.

A report by The Local Data Company last week found more than 100 stores once belonging to the retailer remain empty three years after its closure.

Some 13 per cent of the 807 former Woolworths stores are empty, although that compares to 30 per cent a year ago.

Discounters – 29 per cent – and supermarkets –17 per cent –have taken on most of the stores, but there has also been a rise in the number of stores which have been demolished, from 1.3 per cent in January 2011 to 8.4 per cent this month.