Collective consultation and appointment of administrators

Ellard v Alliance Transport Technologies Ltd

An employer can be ‘proposing to dismiss’ staff for collective redundancy purposes even where the proposal is provisional and other options are still in play.

Background

ATT employed 51 employees. It got into financial difficulties and entered administration on 2 May 2023, on which date 15 of its staff were dismissed for redundancy. On 5 May when an interested party confirmed it wouldn’t be making an offer for the business, most of the remaining staff were dismissed. Various employees brought tribunal claims for protective awards (under s. 188 of the Trade Union and Labour Relations) Consolidation Act 1992) for a failure to collectively consult, including 3 employees who had been dismissed on 2 May. The tribunal awarded a protective award to those employees dismissed on 5 May but not to those dismissed on 2 May, on the basis that only 15 dismissals were ‘proposed’ on 2 May, so no collective consultation had been triggered. The three dismissed on 2 May appealed.

EAT decision

The appeal was allowed - with the EAT substituting a finding that all three claimants were entitled to a protective award of 90 days’ pay.

The question to be asked under s. 188 is not whether there was a discrete ‘proposal’ to dismiss 20 or more employees on a particular day; it is whether the employer was ‘proposing to dismiss’ 20 or more employees within a period of 90 days or less (an inherently fact sensitive question). This involves current and ongoing consideration of future events, albeit ones which are not certain. The duty to consult is not triggered where closure is merely mooted as a possibility, but it can arise where closure is a clear, albeit provisional, intention.

On the evidence, on 2 May, there was a fixed, clear, albeit provisional intention to close the business. Unless the business could be sold to the one remaining prospective purchaser, it would be wound up. This was sufficient to trigger the collective consultation duty.

Comment

In one sense, this was simply the tribunal getting the law wrong. On another however, it’s a useful reminder that once an employer forms a clear intention to dismiss 20 or more employees for redundancy the duty to start collective consultation is triggered, notwithstanding the fact that the intention is only provisional. See for example, Keeping Kids Company v Smith, cited with approval by the EAT here.

Employers should also remember that, from April 2026, the penalty for getting it wrong has increased substantially – from a maximum of 90 days’ pay to a maximum of 180 days’ pay per employee.