TGWU v Morgan Platts Ltd (in administration) EAT/0646/02 (IDS Brief 739 2003)
The rights of workers in the situation of collective redundancy have been criticised for their lack of punch. This case strengthens the collective rights of employees. If an employer fails to consult the recognised union or elected workplace representatives where 20 or more employees are being made redundant at the same establishment over a period of up to three months, the sanction is for the union to apply for a protective award for the affected employees under section 188 of Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). If the Tribunal makes a protective award, how is compensation calculated - how long is the protected period?
The EAT in TGWU V Morgan Platts (in administration) says that the starting point is the maximum 90 day period, with any reductions needing to be justified by the circumstances of the case.
Under section 189 TULRCA, where the Tribunal makes a protective award, the compensation payable to each affected employee is a week's pay per week of the "protected period". The "protected period" is of such length as the Tribunal considers just and equitable in all the circumstances having regard to the seriousness of the employer's default in complying with the duty, subject to a maximum of 90 days.
In this case, without any prior warning, the Platts Mill company went into administrative receivership. 35 employees were told that their employment was being terminated with immediate effect. Before the dismissals took effect, the TGWU had not been informed of the company's problems nor of their possible effects on employees.
The TGWU applied for and were granted a protective award from the Employment Tribunal. But the Tribunal set the protected period at only 30 days even though the employees had been totally deprived of their consultation rights. The TGWU appealed.
The EAT said that the Tribunal had been wrong to use a 30 day protected period as the starting point. Instead, confirming its previous decision in GMB v Rankin and Harrison [1992] IRLR 514, the EAT said that the 90 day maximum protected period was the correct starting point. The Tribunal should then go on to consider whether there were circumstances to justify a departure from that 90 day maximum.
The EAT confirmed that the company had been in serious default and that there had been no consultation at all. There were therefore no reasons to justify a departure from the 90 day maximum protected period, which the EAT substituted for the 30 day protected period.
The lesson is that, when arguing over the length of the protected period, the starting point should always be the 90 day maximum. It is then for the employer to come up with reasons as to why the Tribunal should depart from that maximum. The lesson for the company is also clear - their failure to consult could cost them over £100,000. The Platts Mill company went into administration, as is often the case in failure to consult cases. The affected employees will still get their financial award however, even if the company becomes insolvent as a Section 189 TULRCA award is met from the DTI under the insolvency provisions of the Employment Rights Act 1996.