Award protection

In the event of redundancy, the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A), says that employers have to consult with the union (or directly with their employees) to try to avoid dismissing anyone or, at least, keep the numbers to a minimum. If not, they may find themselves subject to a protective award.

In Amicus v GBS Tooling Ltd (2005, IRLR 683), the employment appeal tribunal (EAT) said that tribunals have the discretion to reduce the size of that award if there are mitigating factors. It is irrelevant whether those factors pre or post-date the decision to dismiss.

What were the basic facts?

Towards the end of 2003, the two main customers of GBS Tooling (accounting for about 70 per cent of its business) gave notice that they were transferring their business overseas.

The company had a series of meetings with the union, starting in December 2003, setting out the situation. An administration order was made on 26 January and on 19 February, production ceased. The company wrote to most of its employees the next day to tell them that their employment had been terminated.

The union claimed that the company had failed to consult and made a claim for a protective award (see box). The company accepted that it had failed to consult after 19 February.

What did the tribunal decide?

The tribunal relied on the guidance in Susie Radin Ltd v GMB (LELR 90), in which the Court of Appeal made clear that if there has been no consultation, tribunals should only reduce the maximum period if there are mitigating circumstances.

In this case, the tribunal said that, because the company had kept everyone informed, the protective award should be for 70 days, not the maximum period of 90 days.

The union appealed, arguing that, once the tribunal had concluded that there had been a failure to comply with section 188, it had no option but to make the maximum award. The fact that the employers had consulted prior to the date of the proposed redundancies was not a mitigating factor.

What did the EAT decide?

The EAT agreed with the tribunal that it was within its discretion to take into account what the company had done before 19 February. There was nothing in the statute to say that the mitigating factors had to come after the date on which the proposal to dismiss crystallised.

The guidelines laid down by the Court of Appeal made clear that tribunals have to consider the seriousness of the employer's breach and any mitigating circumstances put before it. The fact that these employers had consulted was one such factor. It said that the Court of Appeal's guidance indicated that "a company which has deliberately set out to be secretive would appear to fall into a different category from...a company which...has simply failed to disclose it at the right time and in the right context."