An expensive lesson to remember when dealing with closing a company

Most people will be aware that Thomas Cook has gone into administration. Whilst many of us are concerned over our holidays, in reality it has a bigger impact on staff who will be losing their jobs. It has been reported that Thomas Cook has failed to engage in a proper redundancy process which could result in claims for protective awards by the affected employees.

The Law

Regardless of the reason for making redundancies, i.e. closing the whole company or a department or just downsizing, an employer is still obliged to follow certain steps and make sure that the process is fair and reasonable. Arguably the most important stage of any redundancy process should be a consultation period. If an employer fails to consult with an employee during a redundancy process, then the Tribunal can conclude that the employer did not act reasonably making the dismissal unfair.

The length of time that an employer must engage in consultation for will depend on the number of employees being dismissed. If 20 or more redundancies are being made then consultation must last at least 30 days, if there is 100 or more then consultation must be for at least 45 days. An employer can consult for longer than these periods if necessary.

The Consequence

If an employer fails to consult for the minimum amount of time required, then an employee can claim for a protective award which could amount to as much as 90 days gross pay for each employee.

Employers should ensure that they follow a fair and reasonable redundancy process to avoid claims being pursued against them.