Former employees had obtained a protective award against the company for failing to consult on the impending redundancies and submitted proofs of debt to the liquidator who sought guidance from the court. The judge had held that since the Act provided only one remedy, the protective awards were not provable.
Held: The appeal was allowed. The underlying basis of a protective award is to be a measure that enforces the obligation placed on the employer and the failure to comply with that obligation is backed by a penalty which is to be ‘effective proportionate and dissuasive.’ ‘As a matter of language the liability to pay a protective award is a ‘liability to which the company may become subject after [the date of liquidation] by reason of an obligation incurred before that date subject at the date when it goes into liquidation.’ True it is contingent on the Tribunal making the award later, but rule 13.12(3) says it is immaterial whether a liability is present or future, fixed or liquidated.’ and given the complete breach of the obligation to consult, the Tribunal realistically did not have a discretion to refuse an award. If it had done so it would have erred in law. The case below should have been argued on the basis of European Law.
Thomas LJ, Jacob LJ, Wall LJ
[2008] EWCA Civ 626, Times 22-Jul-2008, [2008] ICR 1102, [2008] IRLR 642
Bailii
Insolvency Rules 1986, Trade Union and Labour Relations (Consolidation) Act 1992, Council Directive 98/59/ EC of 20 July 1998, Employment Rights Act 1996
England and Wales
Citing:
Appeal from – Day v Haine and Another ChD 19-Oct-2007
The liquidator sought directions from the court after former employees of the company submitted proofs of debt in respect of protective awards made for the company’s failure to consult on their redundancy before going into liquidation.
Held: . .
Distinguished – Glenister v Rowe CA 21-Apr-1999
The claimant sued for breach of trust. The action was re-instated after being struck out for want of prosecution, but in the meantime the defendant had been made bankrupt and then discharged from bankruptcy. An order for costs was then made which . .
Cited – Steele, Regina (on the Application of) v Birmingham City Council and The Secretary of State for Work and Pensions CA 16-Dec-2005
The claimant had received an overpayment of benefits (Job seeker’s allowance), but then was made bankrupt. He now said that this was a debt in the bankruptcy.
Held: It was not. At the date of the bankruptcy order, the possible reclaim was not . .
Cited – Julius v Lord Bishop of Oxford and Another HL 23-Mar-1880
A statute enacted that with regard to certain charges against any Clerk in Holy Orders it ‘shall be lawful’ for the Bishop of the diocese ‘on the application of any party complaining thereof’ to issue a commission for enquiry.
Held: The words . .
Cited – In re Smith ex parte Edwards 1886
The parties to an arbitration agreement had agreed to pay whatever costs the arbitrator decided in his discretion to award. The losing party then went bankrupt.
Held: His bankruptcy did not relieve him of his liability for the costs. The . .
Cited – In re British Gold Fields of West Africa 1899
An order for costs could be proved where the action was in respect of a provable debt or liability. In such a case they were regarded as an addition to the sum recovered. . .
Cited – Talke Fashions Ltd v Society of Textile Workers EAT 1978
The employer announced the closure of two factories and the redundancy of the workforce, at one factory in 15 days’ time and, at the other, in 63 days’ time. There was no consultation. The employer appealed a 60 day protective award.
Held: . .
Cited – Susie Radin Ltd v GMB and others CA 20-Feb-2004
The company made redundancies but failed to carry out any effective or honest consultation. The tribunal awarded the maximum 90 days protective order. The company appealed saying that it had given the employees greater notice than was strictly due. . .
Cited – In re T and N Ltd and Others (No 3) ChD 16-Jun-2006
The court considered the application of ‘the bankruptcy template of section 382 to the rules governing the winding up of companies’.
Held: The phrase ‘obligation incurred’ in Rule 13.2(1)(b) was inapt to describe a common law duty of care in . .
Cited – Steele, Regina (on the Application of) v Birmingham City Council and The Secretary of State for Work and Pensions CA 16-Dec-2005
The claimant had received an overpayment of benefits (Job seeker’s allowance), but then was made bankrupt. He now said that this was a debt in the bankruptcy.
Held: It was not. At the date of the bankruptcy order, the possible reclaim was not . .
Cited by:
Cited – Casson and Another v The Law Society Admn 20-Oct-2009
Two solicitors had been made bankrupt and then discharged from bankruptcy. They suffered adjudications by the SDT awarding compensation for matters occurring before the bankruptcies. They appealed, saying that the awards were bankruptcy debts from . .
Cited – McCartney and Unite The Union and Another v Nortel Networks UK Ltd (In Administration) ChD 22-Apr-2010
The administrators gave employees of the company notice of termination of their employment. Then administrators refused consent under para 43(6) to actions against the company in the Northern Ireland Industrial Tribunal for protective awards, unfair . .
Approved – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.
Employment, Insolvency, European
Updated: 01 November 2021; Ref: scu.268797