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Redundancy: Failure to Consult

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The Employment Appeal Tribunal has considered the position as to protective awards subsequent to the Court of Appeal's judgment in Susie Radin v GMB earlier this year. In Susie Radin, the Court of Appeal held that protective awards were punitive (rather than compensatory) in nature, and the starting point for a total failure to consult would normally be the maximum award of 90 days' pay.

In Smith v Cherry Lewis, the Respondent employer was insolvent. The receiver dismissed all 45 employees on grounds of redundancy without any consultation.

The tribunal chairman held it would not be just and equitable to give any protective award since, under the Susie Radin principles, an award would have no punitive effect on the employer since it was insolvent and the DTI fund would pay any awards.

The EAT reversed this. It held that in assessing the protective award, the tribunal should look at the employer's fault at the time of the failure to consult, not at the time of the Claim Form being lodged or tribunal case being heard. That the employer was insolvent, or that the DTI would pay any award, were irrelevant factors and should not have been taken into account.

Cox J. stated that the 'punitive' purpose to the protective award is not retributive in nature, but dissuasive (so as to discourage employers from ignoring the consultation rules). She substituted the maximum award of 90 days' pay for the Appellants.

Smith v Cherry Lewis