Significant Developments In The Area Of Employment Law And Insolvency

Author:Mr Kieran McGarrigle, Rosemary Lundy and Joanna White
Profession:Arthur Cox
 
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The affect of employment law is increasingly being felt in connection with insolvency proceedings. A recent example is the shop workers' Union, Usdaw, winning compensation worth up to £67 million for over 24,000 former employees of Woolworths made redundant following the company's collapse at the end of 2008.

Another area which is hitting the judicial spotlight is the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006, known as "TUPE", to insolvency proceedings. With increasing insolvency activity, it is important that insolvency practitioners keep up to date with emerging TUPE case law. These developments are considered below.

Although these cases are from Great Britain, they will have persuasive effect on the interpretation of Northern Irish legislation and could therefore be applied in this jurisdiction.

£67 MILLION PROTECTIVE AWARD FOR FORMER EMPLOYEES OF WOOLWORTHS

Summary:

It has recently been reported that Usdaw has won compensation worth approximately £67 million for more than 24,000 former Woolworths employees made redundant when the company collapsed at the end of 2008.

Woolworths went into administration on 27 November 2008 and by early January 2009 the administrators had closed all of Woolworths' stores, offices and distribution centres and made nearly 30,000 people redundant in the process.

Usdaw made a claim on behalf of its members for a Protective Award after the administrators failed in their legal duty to consult with the union before making redundancies. After many months of legal wrangling, the Employment Tribunal finally heard the case involving members employed in England, Scotland and Wales in late November 2011 (a similar case was heard in Northern Ireland in 2009 when the Tribunal also made a protective award).

The tribunal found the administrators had failed in their legal obligations to consult with Usdaw and awarded its members compensation of 60 days' pay, capped at £330 a week, the maximum payable in these circumstances. Usdaw says the award excludes some 3,000 former employees who worked in smaller stores where fewer than 20 redundancies were made.

Analysis:

An employer proposing to make collective redundancies is required to consult in advance with representatives of the affected employees and the consultation must be completed before any notices of dismissal are issued. A complaint of failure to consult may be made to a tribunal and if upheld, the tribunal can make a...

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