An employment tribunal has ruled in favour of 345 former 2e2 UK Limited workers’ claims for protective awards.
The former workers pursued claims against 2e2 UK Limited, an IT services group, when they were made redundant over a year ago without consultation.
16 of those Claimants were represented by Morrish Solicitors LLP.
2e2 UK Limited was in serious financial difficulty but chose not to tell its employees. In January 2013 administrators were called in, but by this time it was too late. The company had massive debt and failed to secure additional funding. It therefore made 345 employees redundant without consultation. By early February it was clear no investment or buyer for the business could be secured and a further 627 employees were made redundant. Some parts of the business were sold off saving jobs, but more redundancies were made over the following weeks.
In January 2014, Reading Employment Tribunal found that 2e2 UK Limited had not effectively appointed representatives for employees at any stage throughout the redundancy process. The Tribunal stated that “there was a failure to consult in good time”, and there were no appropriate employee representatives elected. There was “no genuine intention to consult”.
The company tried to defend the claim by suggesting there were special circumstances that meant they could not in practice inform and consult, but the Tribunal heard witness evidence and arguments from Claimants’ representatives and rejected that defence. There was nothing special about the financial circumstances or the speed at which the company entered into administration and many of the factors relied on were merely consequences of the administration.
The Tribunal said “The duty of the administrators to protect the interests of creditors has to be carried out within the law; the duty to protect creditors’ interests does not give the administrator any fiat to ignore legal obligations which might impact on the financial interests of the creditors.”
The Tribunal did also not believe that there were any mitigating factors and said “This is a case where there has been serious default and the Tribunal rejects the contention that there is to be found in the actions of the first respondent mitigation that would justify a conclusion that there should be a reduction of the protective award.”
The full protective award of 90 days’ compensation was awarded to each of the Claimants.
A ‘protective award’ is made to penalise an employer who fails to comply with the relevant collective consultation requirements. Before making more than 20 redundancies, employers must appoint employee representatives (if no union is recognised) and must provide information to those representatives about the proposals to make redundancies and must then consult about the situation and possible ways to avoid redundancies.
Claimants may be able to secure an award from the company if any funds remain after liquidation, but assuming not, they can claim up to 8 weeks of it from the Redundancy Payments Office.
Daniel Kindell, Solicitor at Morrish Solicitors stated: “This is a good result for employees who were kept in the dark about possible redundancies and were dismissed at the drop of a hat. It is just unfortunate that employees can only recover a small proportion of what they have actually lost in the way of contractual redundancy payments, bonuses and other entitlements. We hope the Protective Award will go some way towards helping those employees who suffered significant financial hardship.”