Collective redundancy and protective awards — how to bring a successful claim
This article accompanies the collective redundancy article by Christine Peacock
Martin Jackson is Specialist Advice Manager at Citizens Advice Cornwall, currently helping to build second tier advice capability in a geographical area that is otherwise an advice desert. In 2020 he successfully ran a claim for a protective award obtaining an Employment Tribunal judgment and compensation for 70 clients. Their employer had gone into sudden insolvency and had failed to comply with its collective consultation duties.
Although Martin practised as a barrister in law centres in London and Manchester in the 1980s, he specialised in housing law, and had not previously had any experience in running an employment tribunal claim.
In this article he shares the lessons learnt from that case and also provides templates and examples of the documents he used, for other advisers to adapt and use themselves if potential cases arise.
How to succeed in obtaining a protective award — lessons for sharing
It happened by accident. A well known local restaurant closed suddenly, just days before Christmas, making 76 staff redundant without notice. Citizens Advice were asked to go to a meeting with the staff the next day to talk to them about benefit claims and debt advice.
One of the staff produced a letter from a firm of solicitors in London promising £4,200 compensation on a ‘no win, no fee’ agreement that would have cost each client £800 in legal fees. The solicitors claimed never to have lost a case. It was all very tempting, but it seemed to me that the numbers in the letter relating to compensation for each client were too good to be true. Most restaurant staff earn the minimum wage, not the capped maximum, and although tribunals make an award based on gross pay, protective awards are subject to some deductions. Most people would have ended up with just a few hundred pounds each — while the solicitors would still get their £800 per client, making over £60,000 in total in fees!
Rather rashly I said ‘We could do that for you for nothing’. So we arranged another meeting, while I went away and did my research to see what I’d got myself in to. I discovered that there was a reason why the solicitors had never lost a case — it is really rather easy.
At the next meeting I explained the procedure to the redundant staff, outlined the information I would need from all of them and got them to fill in a form for me with all their details and GDPR consents. They took extra forms away for the people who were not at the meeting. We signed up 70 of the 76 staff.
Starting the claim
I soon learned the first lesson — make sure you get ALL the information you need at the first hit. Going back to 70 people for more information with a deadline looming is not something I ever want to repeat! Also make sure you get a waiver of confidentiality between the members of the group — they are a great resource for sharing information and chasing each other up, but not if you are unable to say who else is in the group.
In many of these situations you are likely to be claiming against the employer ‘in liquidation’ or ‘in administration’ (your clients should already have the details but you can also check the company’s status on Companies House). When a business insolvency creates a collective redundancy situation, the employer has a duty to notify the Secretary of State for BEIS of this. It’s possible to join the Secretary of State as a respondent to the claim as well as the employer, but if the tribunal makes a protective award, the clients can make a claim against the Redundancy Payments Service (RPS) even if you have not done so, so it’s not a requirement. If you do add the Secretary of State for BEIS, it’s unlikely that their lawyers will attend or make representations to the tribunal in most cases.
The first step is to contact the liquidators or administrators for consent to commence a claim for a Protective Award, since their permission is required to lift the automatic ban on suing an insolvent company. You should not wait for their permission to be given before taking the next step, as your request does not stop your time limits running. However, once you have submitted the ET1, the case may be stayed until you get the permission, so it is best to ask early.
You have to make a separate group application to ACAS for each group of claimants for each respondent to the claim, so you will get 2 early conciliation certificates per group. The application for early conciliation is the same as normal, but you have to contact ‘ACAS early conciliation support’ first to tell them you are making a group claim and then submit the EC Notification with a spreadsheet attached with all the clients’ details. You will probably get the EC certificate back the same day as there is nothing to conciliate. It is important to understand that you must have a tribunal judgment that a protective award is payable to receive payment from the RPS.
You use form ET1A for a group claim. The client whose name you put on the form will be the lead claimant and the case will be known as ‘Bloggs and others v X Limited (in liquidation) and the Secretary of State for BEIS’. All the other clients are listed by you in a prescribed form of ‘CSV spreadsheet’ that you request from etrefunds@justice.gov.uk and attach to the ET1A. One person does not claim on behalf of the others; all claimants who are part of the group need to be named on the spreadsheet attached to the ET1A form.
[See separate resources for completion of the ET1A]
What happens next
If there are other employees who have made individual claims arising from the same circumstances this should be mentioned in section 3.1 of the ET1A, or if there are several group claims arising from a similar related situation (e.g. different sites or related businesses), these should be mentioned in section 15, adding the tribunal claim reference number of these other claims, if known. You should do this whether or not you are acting for the claimants in those other cases. The cases will be joined by the Tribunal and it cuts down your paperwork as you then only have to do things once for the joined case.
In most cases the liquidators/administrators and the Secretary of State will not oppose your application but you will be ‘put to proof’, which means that you will need to provide evidence that the duty to consult applied and was not complied with. It is likely to take about a year for your case to reach a tribunal, so managing clients’ expectations is crucial. This delay can be to your clients’ benefit as it means that income tax will not be deducted from the Protective Award payment if it is made in the next tax year. There will be a Case Management Order with the usual orders for bundles of relevant documents, a Schedule of Loss and exchange of witness statements. There is no need for a Schedule of Loss in a Protective Award claim and preparing one for a large group is a lot of work for no good reason (ask me how I know!), so if you get a standard CMO which includes it, it is worth applying to the tribunal to have it amended. Of course, if the claim for a protective award is submitted along with other claims a client may have (for unfair dismissal, unpaid wages, notice pay, etc, which may sometimes be the case), then a more complex Schedule of Loss will need to be completed.
It is worth asking the liquidator to concede some of the key facts and including the exchange between you in the bundle to narrow down the issues to be considered. This might include confirming that all the claimants were employed at the relevant date at the same establishment or establishments at which 20 or more people were made redundant, including all the claimants. Other points could be that there was no recognised trade union or employee representative body, and that there was no consultation. There is no point asking the Secretary of State for these concessions as their ET3 will have stated that they have no knowledge of the facts.
The witness statements can be quite straightforward. You do not need one from every claimant — we used the Chief Executive and the HR Manager, who were among the clients included in our group claim.
[See separate resources for an example witness statement]
The tribunal hearing and securing payments
At the tribunal hearing my contribution was to say ‘Hello Sir’, ‘Thank you Sir’ and ‘Goodbye’. The Judge thanked me for my preparation of the case and took the witnesses through the statements, mainly concerned to establish that there was no trade union or other representative body who should have been bringing the claims. The Order was then made for a protective award for a period of 90 days starting on 1st February 20XX. The whole hearing lasted less than 10 minutes.
The judgment is sent to the respondents by the tribunal. There is no need to make a further claim to the RPS; the claimants will be contacted for information about any benefits claimed and to provide bank details for payment. Even though the award is likely to be for 90 days’ pay, it has to be paid out of the ‘8 weeks missing pay’ element which the RPS is able to pay out, in real terms limiting the award to 8 weeks’ pay. The RPS will pay the 8 weeks’ pay, less benefits and any arrears of missing pay already claimed from the fund, within about 8 weeks. Any balance of the 90 days awarded by the tribunal is claimed as a debt in the liquidation, which the clients should have been advised how to do by the liquidators, but may never see, if there aren’t sufficient funds to pay this balance once the assets of the company have been liquidated.
Although the claim for protective awards did involve time and resources, it is a surprisingly straightforward claim to run from a legal point of view, resulting in substantial compensation being secured for a significant number of clients — more than £200,000 shared between 70 people in our case. Not all local offices will have the capacity to take on these types of cases, but it is well worth being aware of them and what can be achieved in the right circumstances.
Martin Jackson, Specialist Advice Manager at Citizens Advice Cornwall
