A tribunal has considered the collective redundancy consultation requirements in relation to over 27,000 employees of Woolworths, which went into administration in 2008.
It held that Woolworths had substantially failed to comply with its duty to consult employee representatives, and made a protective award of 60 days' gross pay to each affected employee. However, it also had to decide which employees were entitled to receive that compensation. Collective consultation must take place where an employer proposes to dismiss as redundant 20 or more employees 'at one establishment' within a period of 90 days or less. Therefore staff working in Woolworths stores with fewer than 20 employees would not receive the protective award unless Woolworths could be regarded as one national retail establishment.
Broadly, an 'establishment' is the unit to which employees are assigned to carry out their duties. However, the precise definition is a question of fact and depends on the individual circumstances of an employer's structure. Tribunals will take into account geographical, administrative and organisational factors. In the case of Woolworths, the Tribunal held that each store was a distinct establishment. The stores were organised as individual entities geographically and in terms of their business purpose, and employees were assigned to the particular store in which they worked. Therefore the duty to inform and consult was only triggered in stores with 20 or more employees. It is likely that this decision will be appealed, particularly given the large number of employees who were excluded from entitlement to an award.
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