Official receiver guidance states that an employment tribunal can order a protective award of up to 180 days' pay where an employer failed to consult properly before redundancies, affecting employers and employees.
Key facts
- Who: Employers carrying out redundancies, employees and their representatives, and those dealing with insolvent employers
- From: Current guidance
- Source: 58. Employment law and insolvency
Chapter 58 of the Technical Guidance for Official Receivers, "58. Employment law and insolvency", sets out how a protective award works when an employer has not consulted properly before a redundancy scheme.
Consultation before redundancy
Before declaring a redundancy scheme, an employer must consult the employees. Where the employer has more than 20 employees, the consultation is with the employees' representatives. The guidance says the consultation must be fair and proper and must happen at a time when meaningful discussions can still take place.
What a protective award is
A protective award is made by an Employment Tribunal to an employee or a group of employees where the employer did not consult properly before starting a redundancy scheme. Employees can claim to an employment tribunal, and compensation takes the form of a protective award.
The limit
The tribunal can order the employer to pay a week's pay to each employee. The period runs from the first dismissal or the date of the award, and ends after a period the tribunal considers fair. It cannot exceed 180 days' pay. Payments the employer has already made to the employee are taken into account.
The guidance cites sections 189 to 191 of the Trade Union and Labour Relations (Consolidation) Act 1992 for these rules.
Insolvent employers
If an employer becomes insolvent, certain debts owed to employees, along with a redundancy payment, may be paid by the Secretary of State from the National Insurance Fund. The guidance lists wages, holiday pay, notice pay, a basic award for unfair dismissal and protective awards for an employer's failure to consult representatives about proposed redundancies.
What this means for employers and employees
For employers, failing to consult properly before redundancies can lead to a protective award of up to 180 days' pay. The tribunal decides whether to make an award and for how long, within that limit.
For employees, a claim to an employment tribunal is the route to a protective award where consultation was not carried out properly. If the employer is insolvent, protective awards are among the debts that may be paid from the National Insurance Fund.
Sources
- 58. Employment law and insolvency, Technical Guidance for Official Receivers, GOV.UK