£1,000,000 Paid to Employees after Adminstration
A recent Employment Tribunal has ordered the payment of approximately £1,000,000 to nearly 300 former staff of the European Division law firm who’s employment was terminated when it went into administration. The Tribunal held that the firm had failed to carry out a proper redundancy consultation with the staff. It is essential that when over 100 redundancies are proposed, or considered a possibility, a formal consultation process is entered into. When over 100 staff are effected, the employer must carry out as a minimum, a formal 45 day consultation process before making staff redundant. The law firm had started the process, but when it went into administration, the process was cut short. As a result, the firm was in technical breach.
The Trade Union and Labour Relations (Consolidation) Act 1992 (TULCRA) states that if an employer is proposing to dismiss 100 or more employees at one location within a 90 day period, then a formal consultation exercise must commence at least 45 days before the first employee is dismissed. If the number of employees affected is between 20-99 in a 90 day period, then the formal consultation must commence at least 30 days before the first dismissal. It is important to note that all ‘effected’ employees must be counted, therefore if people are invited to take voluntary redundancy, they are to be included in the figures for the purposes of the formal consultation. A further important consideration for employers when entering into redundancy processes, is that if an employer is proposing to make redundant 20 or more employees at “one establishment” within a 90 day period, then they need to notify the Secretary of State (for Business, Innovation and Skills) by completing Form HR1.