While the general view is the recession is over some of its effects can still be felt today.
As recently published on our Talking HR blog, the demise of Woolworths, Ethel Austin and Comet has had a big impact on how the typical High Street looks and unintentionally also on how administrators have to deal with redundancies.
The big change was of course collective consultation duties. Just over a year ago they only applied where 20 or more redundancies took place at one establishment in a 90-day period. So a redundancy exercise could have involved hundreds of employees without any duty to consult with unions or employee representatives as long as there were fewer than 20 employees leaving from any given site.
The Woolworths and Ethel Austin cases changed all that*. Claims for ‘protective’ compensation awards for all the redundant employees, not just those in stores where there were 20 or more, led to the Employment Appeal Tribunal’s bold step of re-writing collective consultation laws. The Employment Appeal Tribunal removed the phrase “at one establishment” from the statute. This decision meant employers were suddenly under a duty to collectively consult whenever they proposed 20 or more redundancy dismissals, regardless of where those dismissals were within a 90-day period. This is a huge administrative challenge for administrators of multi-site organisations. The European Court of Justice will have the opportunity to overturn the decision next year.
There has been a similar fight for protective awards for the former employees of the retailer Comet. The news broke in June that the Leeds Employment Tribunal had found that Comet “failed to comply with its obligation to consult trade unions and representatives of employees affected by the proposed redundancies“. The Tribunal made awards of compensation for up to 90-days pay. However the answer to the question of which employees would benefit from these awards has only just been revealed.
The position generally is that where there is a recognised union it will make the claim and the award will be made for the benefit of the members that it represents. Where there is no union, elected representatives will make a claim and the award will be for the benefit of all the employees represented. However where there are no representatives, individuals have to bring their own claims and the award can only benefit the individual and no other employees.
In the Comet case the ‘representatives’ had not been properly elected. They had just been appointed by management. As there were no true representatives it looked as though individual employees had to bring the claims and each award would be limited to the individual.
However – in another bold move the Employment Tribunal has held that claims made by the false representatives would be treated as claims made by properly elected representatives. This means that all the employees that they were supposed to be representing could benefit from the awards. The decision means that thousands more former Comet employees will benefit from compensation payments which would have otherwise been limited to just the employees who had made a claim.
The decision is at Employment Tribunal level so it is not binding on other Tribunals. Administrators need to be aware of the ramifications of this decision. For funding/time reasons, Administrators might side-step the formal election process but still try to do their best to consult – perhaps by having ‘unofficial representatives’. If this decision is followed – doing this might actually lead to a greater total compensation award than having no consultation at all.
For more information, email email@example.com.
*Usdaw and others v Ethel Austin Ltd (in administration) and others.
**Akbar and others v Comet Group Ltd (In Liquidation)