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In the case of Susie Radin Ltd v GMB and others, the Court of Appeal set out some guidance in relation to factors that should be taken into account by employment tribunals when quantifying the amount of a protective award (see box, right). The Court of Appeal’s decision heralded a shift in the approach by tribunals to a practice of awarding a 90-day protective award unless there were exceptional circumstances.
The Employment Appeal Tribunal (EAT) has now interpreted the guidelines set out in Susie Radin in the context of Amicus v GBS Tooling Ltd (in administration).
Amicus v GBS Tooling Ltd : Facts
GBS had two major customers which accounted for 70% of its business. They gave notice of termination in September and December 2003. Following receipt of the second notice, the company met with its Amicus shop stewards to advise of the potential seriousness of the situation if the notices were not subsequently withdrawn.
- In late January 2004 two meetings were held with Amicus representatives at which they were advised of the company’s insolvency and uncertain future.
- Shortly afterwards in January an administration order was made.
- In early February letters were sent to employees advising them of the company’s administration and warning them of the lack of uncertainty in relation to their long-term prospects.
- Meetings were held with the employees advising them of imminent redundancies on 13 February. However, it was still anticipated that several weeks’ worth of business remained and that a sale of the business as a going concern was a possibility.
- Unfortunately, however, on 19 February 2004 GBS’s last remaining customer withdrew its business and production ceased with immediate effect.
Amicus brought proceedings for a protective award on the grounds that s188 had not been complied with. GBS accepted that the proposal to make redundancies was made on 19 February when production stopped and that there had been no consultation with the union after that date. It did not argue that special circumstances applied. Therefore, the issue before the ET was the amount of the protective award.
ET’s decision
The ET found that before 19 February there had been a number of meetings with union representatives and the employees themselves at which the situation was discussed and it was made clear that redundancies were likely. Accordingly, it considered it was just and equitable to make a protective award of 70 days’ pay per affected employee. This was appealed by Amicus, which argued that the effect of the Susie Radin case was that the ET had no option but to award the maximum 90-day protective award.
EAT’s decision
The EAT held that the ET had not erred in making a 70-day protective award. The employers had technically failed to carry out any consultations after formulating the proposal to dismiss by reason of redundancy, following the company’s insolvency. However, the fact that in prior consultations the union and the employees had been kept informed of the situation, and were told that redundancies were almost certainly imminent, was a mitigating factor justifying a reduction in the protective award.
The EAT held that TULRCA did not prevent a tribunal taking into account mitigating factors simply because they predated the date on which the proposal to dismiss was crystallised. When determining the level of protective award appropriate to punish a company, a tribunal should look at:
- the nature of the breach;
- the consequences of the breach; and
- the state of mind lying behind the breach.
The EAT felt that a clear distinction should be drawn between employers that deliberately set out to be secretive and those that fail to comply with the information and consultation obligations through negligence or misguidance, or those that simply fail to disclose the information at the appropriate time in the appropriate context.
In this case, the fact that there had been earlier meetings and disclosures put the employer into a different category from an employer that deliberately, recklessly or even negligently takes no steps whatsoever to inform the employees or unions of ‘the problems that might and/or were imminently going to arise’.
Comment
This case highlights the expensive consequences of failing to comply with collective redundancy consultation obligations and the importance of ensuring that failure to comply does not arise as a consequence of negligence or recklessness.
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