Debenhams workers lose out on thousands in compensation over redundancies

High Court reporters

The High Court has overturned a decision which could have meant the payment of hundreds of thousands of euro in compensation for former Debenhams' workers.

Mr Justice Anthony Barr reversed a Labour Court decision which found the retail clothing store should pay €1,140 to a shop assistant for a breach of its obligations under the Protection of Employment Act, 1977 in relation to consultations with workers' representatives once redundancies are contemplated.

It was a test case for some 792 other former workers.

In April 2020, Debenhams Retail Ireland announced it was going into voluntary liquidation with the closure of its stores in Ireland after its UK parent said it would no longer continue funding what already was an ailing business. Debenhams was hopelessly insolvent with very few assets, massive debts and the liquidation happened at the height of the first Covid lockdown, the court heard.

The following month, workers picketed outside stores seeking four weeks of redundancy per year of service and this lasted for more than a year until the Government created a retraining and upskilling fund for the workers.

One of the workers, shop assistant Jane Crowe, brought a Workplace Relations Commission case seeking four weeks redundancy. A WRC adjudicator awarded her €1,140 compensation and following an appeal by the Debenhams liquidators, the Labour Court upheld that decision.

The liquidators then appealed that decision on a point of law to the High Court.

On Friday, Mr Justice Barr allowed the Debenhams appeal.

The judge said the Labour Court found there was an obligation on Debenhams to commence consultations with the workers' representatives just before Easter on April 9, 2020 when its board of directors met to consider the withdrawal of funding by the administrators of Debenhams' UK parent and also took the decision to go into voluntary liquidation.

The judge found, however, that a letter from a Debenhams director to a workers representative on April 14th, which was just after the Easter bank holiday weekend, constituted the start of the consultation process and also provided information that all employees were to be made redundant.

Therefore, the judge held that the Labour Court erred in law in finding that the consultation process, as required under the 1977 Act, commenced with the holding of the meeting on April 17th, 2020.

The judge said he could also not allow stand the finding by the Labour Court that a delay between April 9th and April 17th meant certain unidentified options were no longer available to workers' representatives because provisional liquidators had already been appointed. This finding was made by the Labour Court without evidence, he said.

There was also no evidence that Ms Crowe suffered any financial loss or additional distress because of the delay, he said.

He held as a matter of law that there was no loss suffered by Ms Crowe due to the delay and accordingly the Labour Court erred in awarding her compensation.

The judge also said had the directors of Debenhams allowed the company to continue trading, they would have been guilty of fraudulent trading, or at the very least, of reckless trading.

Had they tried to make any payments to or deals with the employees prior to the appointment of the provisional liquidators, these would have been struck down by the High Court as unfair preferences to certain creditors, he said.