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Employer fined £120k for lack of consultation

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Union members working for former Swindon printing firm Centrabell Limited, which formerly traded as Tekprint, have won an employment tribunal claim to the tune of £120,000 for failure to consult over proposed redundancies.

According to union Unite, on June of last year staff at the printing firm were called together and told that the business was closing and that they were redundant with immediate effect. The company formally went into liquidation in September 2007.

Unite brought the case on behalf of its 22 members claiming the firm had failed to consult with the union or the workforce prior to closure.

Martin Hodges, regional officer of Unite, who gave evidence at the tribunal hearing, said: “The union was given no warning of the closure, despite the fact that we were in regular contact with the company.”

The Bristol Employment Tribunal held that the company had made no disclosure of the proposed redundancies to the union and that it was only the forceful representations of Unite’s Hodges that prompted the company to even provide letters of dismissal to the workers.

Speaking to HRZone.co.uk, Esther Smith, partner at Thomas Eggar LLP, said: “This case is clearly a victory for the individuals concerned, and demonstrates that an employer, who fails to comply with the collective consultation provisions for large scale redundancies, does so at its peril. Whilst having the resources of a union to fund this litigation was clearly a benefit to the employees concerned, the law requiring minimum consultation periods covers all employees, and where there is no union to consult with about impending redundancies, the employer should be consulting with elected representatives of the employees themselves.”

Smith added: “One thing to bear in mind though when considering litigating over matters such as these, is whether or not you are fighting for a pyrrhic victory. Often employers make large scale redundancies on short notice due to extreme financial pressure, and there is no point taking action to enforce your rights and get an award against a company that has no funds to meet that award!”

The news comes as a timely warning to the many firms that are considering redundancy in the wake of the credit crunch. HRZone.co.uk recently reported on the latest quarterly Chartered Institute of Personnel and Development and KPMG Labour Market Outlook (LMO) survey showing the number of employers planning redundancies increased from 22% to 27% between the second and third quarter LMO surveys.

One Response

  1. Looking behind the story
    This is obviously a very sad story for the employees, employer, investors and creditors – and probably quite a few customers. I know nothing of the company or those involved, but my sincere condolences go to all.

    However, does this story not raise more general questions?

    Just for reflection, and with no special message save that I think these sort of situations deserve further thought by employers, legislators and employee reps alike:

    – do you wonder at all *why* the company didn’t engage its workforce, as it was legally bound to do?

    – is it likely the ET decision actually made any difference to the employees involved – or was it even possibly a Pyhrric victory as Esther hints such actions can be?

    – does Employment Law actually get such situations right, most especially when involved with an organisation’s closure; for example, with regard to balancing others’ claims for unpaid supplies – or an employee’s fortuitous dependency that there may actually be a larger owner of the closing organisation to discharge any ET liabilities?

    If you wonder about my own angle, it is that Employment Law seems to me to be a very blunt tool. It seems to be driven by the far stronger syndicalist influences of some other European countries, that may not (currently) prevail in the UK democratically, while prejudicing the outcomes of employees of smaller companies and, at the same time, being an added disincentive to new business start-ups and would-be entrepreneurs.

    To my own knowledge, just as one tiny example, I know of several small employers who outrageously do not pay the Minimum Wage, whose employees (including my own family members) refuse to complain because they know their eomployer would close if they did.

    Employment Law is one element of this story; Trades Union lobbying is of course another; but who is questioning what might be far more practical, equitable and economically realistic – and mutually beneficial?

    Just some thoughts. I don’t want to get involved in unhelpful, polarising politics. Whatever your special interests, I hope these questions are worth asking?

    Jeremy

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Annie Hayes

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