If an employer fails to comply with the duty to collectively consult before making redundancies, employees can, in certain circumstances, make a claim for a protective award. In Independent Insurance v Aspinall, the Employment Appeal Tribunal held that an award in favour of an individual claimant cannot extend to other employees affected by the employer’s failure to consult.
Independent Insurance, which employed about 1,550 workers, went into provisional liquidation on 17 June 2001 and made 971 of its staff redundant (over 350 of them at the office in Cheadle).
As a result of the immediacy of the closure, the company failed to comply with its obligations under sections 188 (duty to consult) and 188A (election of employee reps) under the Trade Union and Labour Relations (Consolidation) Act (TULRCA).
It followed, therefore, that individuals faced with redundancy (as there was no recognised trade union or elected employee representatives) were entitled to make claims for a protective award under section 189 of TULRCA.
A large number of claims were stayed as a result of proceedings in the Companies Court and when the application was heard, most of the claims were either struck out or had been settled. However the claims of Mr Aspinall and Mrs O’Callaghan (who were both employed at the Cheadle office) for a protective award remained outstanding and proceeded.
The Tribunal agreed that the company was in breach of TULRCA and made a protective award of 90 days’ pay to all the employees who had worked at the Cheadle office, although neither Mr Aspinall nor Mrs O’Callaghan had sought to have the award made in respect of their colleagues.
The Tribunal justified the ruling by stating that once it had established that the claimants had status to bring a claim and that the duty to consult had not been complied with, then it could make a protective award.
This is described in section 189(3) TULRCA as “an award in respect of one or more descriptions of employees who have been dismissed as redundant (etc.) and in respect of whose dismissals (etc.) the employer has failed to comply with a requirement of section 188”.
The company appealed, arguing that the Tribunal could only make a protective award for “one or more descriptions of employees”. It stated therefore that in the event of an individual making a claim, it had to interpret that phrase “as referring to that individual only rather than the entire class of which he was one”.
The EAT agreed, holding that sections 188, 188A and 189 of TULRCA give representative rights to trade unions and elected representatives only. Given their rights the EAT felt it would be an “amazing sea change in the legislation” if an individual had greater representative status than a trade union or elected representative so that they could make a claim for everyone affected by the redundancy.
The EAT said this would “be a wholly unprecedented widening of the scope of representative actions without there being any safeguards”. As a result, employees whose claims had been struck out or dismissed would be able to benefit. Furthermore if the Tribunal’s reasoning was correct, it would be impossible for an employer to defend a claim or consider which defences might arise in relation to different individual employees.
TULRCA had to be read in its context and to have regard to the fact that Parliament could not have intended “to produce such an absurd result”.
As a result of this decision, if a protective award claim is brought, it is imperative for trade unions to identify all of its relevant members in workplaces where it is not recognised and no employee representatives have been elected. Any members who do not bring proceedings in their own name will not be able to benefit from any successful protective award claim.