An Employment Tribunal ruled on Friday in favour of former Phones4U workers based at the Head Office and Merry Hill Shopping Centre, who have established that Phones4U failed in their statutory duty to consult with them about impending redundancies.
The former workers pursued claims against the mobile phone retailer when they were made redundant following the administration of the company in September 2014.
Over 100 of those Claimants were represented by Leeds based Morrish Solicitors LLP and all were awarded 90 days’ pay. Up to 8 weeks of that award can now be claimed from the government’s Redundancy Payments Office.
The Phones4U business model was largely built on negotiating ongoing contracts with networks such as O2, Vodafone and EE. The ultimate downfall of Phones4U was the decision of all three networks to terminate their contractual relationships with the company. The O2 contract was terminated in February 2014 and Vodafone gave notice on their contract on 6 August 2014. This meant that Phones4U had become entirely dependent on the contract with EE. But on 12 September 2014, EE intimated that it would not be renewing its contract. Administrators were appointed on 15 September and mass redundancies were made just 4 days later.
Given the evidence available, the tribunal thought it was probable that some plan to make redundancies had been formulated during the period 7 August 2014 to 1 September 2014 following the notice by Vodafone to terminate its contract and the failure of further negotiations. However, Phones4U made no attempt to consult with its employees about ways of avoiding redundancies, reducing the number of redundancies or mitigating the consequences of redundancies before making 3,358 employees redundant on 19 September 2014.¹
On 13 January 2017, Employment Judge Lloyd of the Midlands West Employment Tribunal decided that “there was no attempt to consult with them (employees) or to elect representatives to enable such consultation to take place. No suggestion has been made that there were special circumstances that rendered such consultation not reasonably practicable, or which mitigate against the failure to do so…In the absence of any evidence that points to the employer attempting to comply with its obligations or any mitigating circumstances, I conclude there are no grounds for me to reduce the same and the protective award shall therefore be the maximum of 90 days.”
Daniel Kindell, Associate at Morrish Solicitors stated: “We are delighted to have been able to secure the best possible result in this case for employees at Head Office and the largest retail store. Consultation laws are designed to make sure that employees have every opportunity to feed back into the redundancy process before dismissals take effect and, if job losses can’t be avoided, to make sure as much as possible is done to minimise the impact. Companies that enter into administration and dispense with their staff, without advance notice or consultation, all too often have complete disregard to the impact on the individual, their families and their communities. The Tribunal’s judgment recognises the severity of Phones4U’s failure to consult and we hope it gives ex-employees some sense of justice.”
¹ When a company intends to make more than 20 staff redundant at a single workplace there is a statutory period for consultation of a minimum of 30 days. That period is greater where over 100 staff are to be made redundant at one workplace. Employers must appoint employee representatives (if no union is recognised) and must provide information to those representatives about the proposals to make redundancies and consult about ways of avoiding redundancies, reducing the numbers or mitigating against the effects of those redundancies – Trade Union and Labour Relations (Consolidation) Act 1992 s188. A failure to do so gives rise to a claim for a Protective Award, and a Tribunal can award compensation of up to 90 days’ gross pay, in addition to any redundancy or notice pay they may have already received, no matter what their length of service. If successful, employees can claim up to 8 weeks of that from the government’s Redundancy Payments Office.