When making multiple employees redundant, employers should consult with individuals and/or recognised trade unions representing them, as per s. 188 of TULRCA 1992. In Northern Ireland, failure to comply with s. 188 may lead to a protective award not exceeding 90 days’ pay per affected employee; in the event that employees’ representatives action claims on their behalf.

Since April 2013, the length of a protective award in England and Wales is 45 days. Nevertheless, the EAT held it is unreasonable to expect an employer to trade whilst insolvent in order to fulfil its obligation to consult under s. 188 of TULRCA. In the present case, the Employment Tribunal had considered it appropriate to make a protective award of 90 days’ pay pursuant to the Appellant’s breach under s. 188 (before the change in law in England and Wales).

However, the EAT noted that the Employment Tribunal had failed to consider the Appellant’s explanation for carrying out the dismissals with such immediacy. Had the Appellant not acted as it did, it would have run the risk of trading whilst insolvent. This could potentially have resulted in company directors incurring personal liability for obligations assumed by the company during that period.

Furthermore, directors could have been prosecuted for fraudulent trading, if the company had contracted credit when it may have been unable to secure repayment. As the Employment Tribunal had failed to take account of the consequences of trading whilst insolvent, the previous protective award of 90 days could not stand. The EAT thus reduced the protective award to one of 60 days. http://www.employmentappeals.gov.uk/Public/Upload/12_0375fhwwSBLA.doc