Hutchins v Permacell Finesse Ltd
The law states that if employers fail to consult when they propose to make 20 or more employees redundant, they can claim for a protective award of up to 90 days’ pay. The Employment Appeal Tribunal (EAT) has said in Hutchins v Permacell Finesse Ltd (in administration) (IDS 848) that if there is a total failure to consult and no mitigating circumstances then employees should receive the maximum award of 90 days' pay.
Basic facts
Mr Hutchins was told in a telephone call to attend a meeting on 18 May 2006 at which he was told, more or less out of the blue, that he was one of almost 80 people about to be made redundant. The company subsequently went into administration.
Mr Hutchins was dismissed and brought a tribunal claim for failing to consult him.
Relevant law
Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) requires employers to consult with “appropriate representatives” if more than 20 employees are to be dismissed within 90 days or less. The consultation has to begin at least 30 days before the date of the first dismissal if fewer than 100 employees are to be made redundant. If more than 100 employees are to be made redundant, the consultation period must start 90 days beforehand.
If an employer fails to consult, employees are entitled to bring a claim for payment of a protective award. This is fixed at a maximum of 90 days' pay. If the employer is insolvent (as in this case) the protective award is guaranteed to be paid by the Secretary of State.
Tribunal decision
Given the number of redundancies in this case, the tribunal said it was clear that the minimum consultation period under TULR(C)A was 30 days, a requirement which the company had clearly breached. Nor did there seem to the tribunal to be any mitigating circumstances to explain the company’s total failure to consult.
In terms of financial remedy, however, the tribunal awarded Mr Hutchins a protective award of 30 days’ pay rather than the maximum of 90 days, because that matched the 30 day consultation period he was entitled to and this period was therefore “just and equitable” in the circumstances.
Mr Hutchins appealed, arguing that he should have received 90 days’ pay.
EAT decision
And the EAT agreed. It said that the starting point for considering the appeal was the Court of Appeal decision in Susie Radin Ltd v GMB and ors (LELR 90) which made clear that although tribunals have a wide discretion to do what is just and equitable, their focus should be “the seriousness of the employer’s default”.
The EAT also accepted that it was for the tribunal to assess the length of the protected period but that the proper approach if there has been no consultation is “to start with the maximum period and reduce it only if there are mitigating circumstances.”
It also said the tribunal was wrong to link the consultation period and the protective period, because “it is now the law that on a failure to comply with the consultation regime in respect of any number of affected employees, consideration of the protected period should begin at 90 days. Applying the guidance given in Susie Radin, the Tribunal should then work downwards to take account of such consultation, or other mitigation, as there was.”
Relying on the case of UK Coal Mining Ltd v NUM (LELR weekly 41), the EAT said that it had jurisdiction to question the tribunal’s assessment of a protective award because it had not observed the guidance in Susie Radin.
That being so, it allowed the appeal and increased Mr Hutchins’ award from 30 to 90 days' pay.