The Court of Appeal has just decided in Susie Radin Ltd v GMB & Ors (2004 IRLR 400), in a case backed by Thompsons, that the purpose of the protective award is to ensure that employers comply with the legislation and consult with their employees. If they fail to do that, they can expect to be penalised.

What were the facts of the case?

The company owned a clothing factory, employing 108 workers. It had a recognition agreement with the GMB although not everyone was a member.

The first indication that the union had that the factory might close was on 20 March 2000, when the official received a letter from one of the company directors rejecting its pay claim, and saying that the factory might not even remain open.

On 6 April 2000, the employers notified the GMB of impending redundancies, which they indicated would take effect on 14 July. Following an acrimonious meeting with the union on 19 April, the company sent dismissal letters to everyone. On 13 June, the GMB official and a shop steward met with the employers to try to save the factory, but the factory closed on 14 July without any further contact between the two parties.

What claims did the union lodge?

The union applied for protective awards for its members, and the employees also claimed for unfair dismissal. The employment tribunal found that the employers had failed to comply with the consultation requirements set out in s.188 of the Trade Union and Labour Relations (Consolidation) Act (TULR(C)A) and awarded a protective award of 90 days (the maximum).

But it rejected the unfair dismissal complaints. The tribunal concluded that since a decision had been made to close the factory and make all the employees redundant, there would have been no point in consulting individually with them, because the end result would have been the same.

The appeal tribunal dismissed the employers' appeal against the protective award.

What did the Court of Appeal decide?

The employers took their case to the Court of Appeal, arguing that the purpose of the protective award is to compensate employees, not to penalise employers. They said that the tribunal should, therefore, have taken into account its finding (in terms of the unfair dismissal claims) that consultation would have been pointless.

The Court of Appeal disagreed. It said the issue of whether there was a point to consultation was not relevant when making a protective award. The purpose of the award was to ensure that consultation takes place in accordance with the requirements of TULR(C)A.

Although the sanction meted out to employers results in money being paid to the employees, there is nothing in the legislation that says that the length of the protected period has to be linked to any loss on the part of the employees.

The only guidance, subject to the maximum of 90 days, is that the award should be what the employment tribunal determines to be 'just and equitable in all the circumstances having regard to the seriousness of the employer's default in complying with any requirement of s.188'.

What should determine the protective award?

When determining a protective award, the Court said that tribunals should keep the following in mind: 

  • that the purpose of the award is to penalise employers for breaching s188; it is not to compensate employees for any loss they may have suffered 
  • that tribunals should focus on the seriousness of the employer's default
  • the default may vary in seriousness - from a technical breach to a complete failure to provide any information
  • the 'deliberateness' of the failure may be relevant, as may the availability to the employer of legal advice about his or her obligations under s188
  • if there has been no consultation, tribunals should start with the maximum period and reduce it only if there are mitigating circumstances.