Newage Transmission Ltd v Transport & General Workers Union and others,
Employment Appeal Tribunal,
25 May 2005
In this case, the Employment Appeal Tribunal (EAT) upheld a protective award of 80 days’ pay. A protective award is an order made by a tribunal when an employer has not fully complied with its duty to consult with employee representatives when planning mass redundancies.
If a protective award is made, the employer must pay any affected staff their usual pay for the ‘protected period’, which can be anything up to 90 days. The rules about consultation are set out in the Trade Union and Labour Relations (Consolidation) Act 1992.
Newage Transmission was considering a redundancy programme that would affect between 30 and 35 employees. It started to consult with the Transport & General Workers Union (TGWU) about the proposed redundancies on 23 September 2003, and the first of the redundancy dismissals took place on 13 October 2003.
The TGWU claimed that the company had failed to fully comply with its duty to consult the union about the planned redundancies. Due to the number of employees affected, the consultation process should have started at least 30 days before the first of the dismissals took effect.
The tribunal upheld the claim because the first dismissal had, in fact, occurred only 20 days after consultation began. It then ordered the employer to pay a protective award of 80 days’ pay to each of the affected employees.
The decision on appeal
Newage Transmission appealed to the EAT about the level of the protective award.
The company argued that, although the Act says that an award can be made of up to 90 days’ pay, in this case, the tribunal should not have made an award of more than 30 days’ pay. Its argument was based on the minimum consultation period in the Act, which states that where 20 to 99 redundancies are planned, consultation must begin at least 30 days before the first dismissals. In comparison, the minimum consultation period where 100 or more redundancies are proposed, is at least 90 days.
The company claimed that if a 90-day protective award is proportionate to an employer’s breach of the longer, 90-day consultation period, the same maximum award is disproportionate where the shorter, 30-day consultation period applies.
The EAT rejected this argument and dismissed the appeal, saying that the point of a protective award is to penalise the employer, rather than to compensate staff.
The question to be asked is: how serious is the employer’s breach of the rules? The loss suffered by the employees, in terms of the number of days’ consultation they missed out on, is irrelevant.
This case is a reminder of the severe consequences for employers of not fully complying with the redundancy consultation obligations. Even though the company did consult with the union, it paid a heavy penalty for cutting short the consultation period. You should remember that the minimum consultation period must be allowed to run its course before any dismissals take effect, even if you feel that full consultation has taken place and that nothing more can be said.