Employment Alert No. 71 - Redundancy - Payment of Protective Awards
August 7, 2003
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Introduction |
The recent EAT case of Transport & General Workers Union v. Morgan Platts Ltd (in Administration) has reiterated that in redundancy situations, the starting point for calculating the number of days for the protective award is the maximum period of 90 days irrespective of whether the relevant consultation period is at least 30 days or 90 days.
In this case, the company had been experiencing financial problems for some time. Without any prior warning, the company was put into Administration and on the following day, 35 employees were informed that their employment would be terminated immediately. No prior consultation took place with the recognised trade union before the redundancies took effect.
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What the Tribunals said |
The relevant consultation period in this case was 30 days.
The EAT stated that the starting point for the protective award was not 30 days but, in fact, the maximum possible award of 90 days. They stated the Tribunal must consider whether there are any special circumstances to justify reducing that period. In this case, there were no such circumstances, and an award of 90 days pay for failing to consult was made.
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What the decision means for Employers |
Employers should remember:
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The purpose of the protective award is to compensate employees for the loss of their right to be consulted (through their representatives) and, therefore, consultation is crucial.
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The Tribunal still has the power to make a protective award even if the employer fails to consult, and the employees immediately secure alternative employment and therefore suffer no financial loss.
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The amount of the protective award could, in collective redundancy situations, result in a maximum protective award of 90 days.
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The Tribunal may reduce the award if the employer can demonstrate that there were extenuating circumstances for the lack of consultation (although this will be quite rare).
