Transcription

• Speaker #0

  Today, in the Indicator HR and Employment Law podcast, we're discussing the judgment in the case of Ellard and others, and Alliance Transport Technologies Limited, in which the Employment Appeal Tribunal considered whether the duty to collectively consult was triggered when administrators were appointed to an insolvent business and provisionally intended to wind the business up. In this case, a manufacturer of commercial vehicle parts, A, fell into severe financial distress and entered administration on 2 May 2023. The administrators immediately dismissed 15 of its employees as redundant. Three days later, after the last remaining interested party had confirmed it did not intend to make an offer for the business, the administrators dismissed most of the remaining workforce with the intention of winding up the company. A group of the dismissed employees, including three claimants who had been dismissed on 2 May, brought claims for protective awards, alleging a failure to comply with the duty to engage in collective redundancy consultation. The Employment Tribunal upheld the claims for a protective award brought by employees dismissed on 5 May. However, the Tribunal rejected the claims of those employees who had been dismissed on 2 May, on the basis that only 15 employees had been dismissed on that date, and at this stage the administrators intended to sell the business as a going concern and it did not matter how high the prospects of that occurring had been. The three claimants who had been dismissed on 2 May appealed, arguing that the tribunal had failed to consider whether the employer was at the relevant time proposing to dismiss within a period of 90 days 20 or more employees, that the Tribunal erred in stating that it was immaterial whether there was a strong or weak prospect of the business being rescued or sold as a going concern, and the Tribunal's conclusion that there was a clear intention to sell the business as a going concern as of 2 May 2023 was perverse and contrary to the evidence, including a report from the Administrators. The Employment Appeal Tribunal allowed the appeal on all three grounds. The key question was not whether there was a proposal to dismiss as of 2 May more than 20 employees, it was whether the employer was proposing to dismiss as redundant 20 or more employees within a period of 90 days. The difference between a proposal and is proposing is not mere semantics. The statutory definitions use of the phrase proposing to dismiss involves and includes current and ongoing consideration of future events, albeit events which are not certain. While the duty to consult will not arise where closure of a business is merely mooted as a possibility, the duty to collectively consult is triggered where it is established as a clear, albeit provisional, intention. The tribunal erred in focusing on the need for a proposal and omitted, at key points in its analysis, the possibility that the proposal may be provisional. Further, in respect of dismissals which may occur over a 90-day period, an employer must also project forward. In this case, the administrators' report revealed that, as of their appointment on 2 May, the statutory objective of selling the business as a going concern could not realistically be met and that they were therefore following the objective of winding up the business. As such, when the administrators were appointed on 2 May, they already had a fixed, clear, albeit provisional intention to wind up the business. That was sufficient to trigger the collective consultation duty. The Employment Appeal Tribunal overturned the Tribunal's decision in relation to the three claimants dismissed on 2 May, substituting a decision that they were entitled to protective awards. Look out for further episodes in this series to stay up to date on all things HR and employment law related.