Administrators were appointed over a company on 2 May 2023 and made a number of employees redundant that day, three of which were the appellants. The administrators then made another round of redundancies on 5 May 2023 when no offers were made for the business and assets.
The Employment Tribunal (ET) held that the employees made redundant on 2 May were not entitled to protective awards, but those made redundant on 5 May 2023, were entitled. The Employment Appeal Tribunal (EAT) overturned that decision on appeal by three employees made redundant on 2 May 2023.
The EAT looked at the relevant legislation – section 188 of the Trade Union and Labour Relations Act 1992. The EAT found that there was an obligation to consult, in light of the size of the workforce of 51, where the employer was “proposing to dismiss”.
The EAT found that the employer, through the administrators, was proposing to dismiss the employees on 2 May and upheld their appeals.
The judge in the EAT criticised the findings of fact made by the ET and its misunderstanding of the administration, but I am not convinced that the EAT was right on that point.
The ET found that there was not “a” proposal to dismiss on 2 May as it was still hoped, as confirmed in the administrators’ report to creditors, that a party would buy the employer’s business and assets.
The EAT held that the question was whether the employer was “proposing to dismiss”, not whether it had a more certain proposal to do so, and kept referring to a sale of a going concern, cross referencing the statutory purpose of administration as survival of the company. The administrators’ report clearly referred to a sale of business and assets.
In any event, the administrators did not object, nor appear, on the appeal, on the basis that the Secretary of State was making the payments. The SoS was joined as a party, but took a neutral position. Administrators should therefore presume that protective awards are payable to employees where a business and asset sale is envisaged, but falls through.
Ellard and others v Alliance Transport Technologies Limited [2025] EAT 169
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