Maximum Protective Award unfair where company faced insolvency

In AEI Cables Limited –v- GMB & others, the Emploument Appeal Tribunal (EAT) considered whether a maximum protective award under the Trade Union and Labour Relations (Consolidation) Act 1992 had been appropriate.

AEI had received advice from accountants that it faced insolvency unless it urgently reduced costs or raised finance. When the latter failed, the directors, fearful that they might be trading unlawfully due to the insolvency situation, closed a plant making 124 employees redundant without any consultation. The Employment Tribunal awarded maximum protective awards of 90 days gross pay per employee in view of the complete failure to carry out collective consultation. On appeal, the EAT considered whether the insolvency was a mitigating factor which should have been taken into account to reduce the protective awards. The EAT took this view and held that protective awards of 60 days pay per employee were appropriate. The lesson here is that even where there is an insolvency situation requiring swift action, tribunals will still expect employers to attempt consultation. As there had been none in this case, the employer still faced a large award against it even after the reduction made by the EAT.

If you would like further information, please contact David Seals, either by telephone on 01306 502218 or by email d.seals@downslaw.co.uk

David Seals

David Seals

Partner

Tel: +44 (0) 1306 502218

Office: Dorking

Email: d.seals@downslaw.co.uk