Update by Simran Lalli, Solicitor, Employment department
Ahead of our upcoming two-part webinar programme on restructuring and redundancy, we look back at the case of Whalley & Others v The Bliss Space (Southport) Ltd (In Voluntary Liquidation) where 23 employees were successful in attaining the maximum ‘Protective Award’ as a result of their employer failing to “inform and consult” with them regarding their redundancies. This case demonstrates the importance of following a ‘proper’ redundancy procedure, regardless of external factors such as the COVID-19 pandemic, Brexit and the like.
Employees at the Southport Theatre and Convention Centre were furloughed in March 2020 whilst the venue was closed as a result of the first national lockdown. In May 2020, the employees discovered the company was in liquidation and the theatre would not reopen. Asocial media post clarified the fact the company had been in discussions with the local authority for a number of months before announcing the closure, yet neither the employees nor their union had not been contacted before the decision was made. Said employees were subsequently contacted by the liquidators and given details as to how to claim their notice and redundancy pay.
The former employees then launched a claim in the Employment Tribunal (ET) for failure to consult with them about the proposed redundancies. The ET ruled the company had failed in its duty to consult with employees under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULCRA) and ordered to pay a protective award of 90 days remuneration to the 23 employees.
Section 188 of TULCRA states that employers must follow collective consultation rules where it proposes to make over 20 redundancies in a 90-day period. Consultations must start at least 30 days before any dismissals take effect (or 45 days if the employer is contemplating dismissing 100 or more employees) and notify the Secretary of State that it is contemplating making large-scale redundancies. The collective consultation rules are based on the number of dismissals being proposed at the beginning of the process. Different consultation rules apply where the employer proposes to make less than twenty people redundant.
This case serves as a warning that if a business intends to make redundancies caused by external factors such as the impact of the COVID-19 pandemic, the ideal of ‘special circumstances’ as a defence may not be enough. Employers still need to comply with their obligations under TULCRA.
Part one of our next webinar series on restructuring and redundancy takes place on Thursday 16 September 2021 at 12pm. You can sign up for this webinar here.
If you would like to discuss this case or for further information on restructuring and redundancy processes, please feel free to email me or contact the Grant Saw Employment department on 020 8858 6971.