Mr M Flanagan and Others v Highlight Green Acres Ltd (in administration) and Secretary of State for Business, Energy and Industrial Strategy: 1302802/2024 and Others Mr M Flanagan and Others v Highlight Green Acres Ltd (in administration) and Secretary of State for Business, Energy and Industrial Strategy: 1302802/2024 and Others
EMPLOYMENT TRIBUNALS
Case No 1302802/2024
Between
Mr M Flanagan and OthersClaimantHighlight Green Acres Limited (in administration) (1) Secretary of State for Business, Energy and Industrial Strategy (2)Respondent
Before
Employment Judge WalkerMr Martin Flanagan for claimantDate 21 February 2025
JUDGMENT
[1]In this judgment “the claimants” means all those 102 individuals whose names appear on the schedule attached to this judgment and “the Claims” means the claims brought by the claimants.[2]The Claims were presented in time. The tribunal has jurisdiction to hear the Claims.[3]The complaints that the first respondent failed to comply with the requirements of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (‘TULRCA’) are well founded and succeed.[4]I make a protective award in respect of all of the claimants in respect of such failures by the first respondent, being one award in respect of each claim brought by each claimant.[5]The description of employees to which the protective award made on the claim of each claimant relates is that same claimant (and no one else).[6]In respect of each and all of the protective awards the protected period is 90 days and begins on 26 January 2024.
REASONS
[7]The Claims were made by a claim form initially presented on 16 February 2024. All are complaints for failure to consult pursuant to section 188 of Trade Union and Labour Relations (Consolidation) Act 1992 (‘TULRCA’).[8]The first respondent was placed into administration on 25 January 2024.[9]No ET3 response was presented to the Claims on behalf of the first respondent.[10]Given that the Claims identify a potential liability on the part of the Secretary of State for Business, Energy and Industrial Strategy, the papers were copied to the Secretary of State who was asked if they wished to play a part in the proceedings. The Secretary of State presented a response on 31 May 2024 which was accepted by the tribunal. The Secretary of State confirmed that the Claims were neither supported, nor resisted.[11]The Claims were heard at a hearing on 6 February 2025. Mr Flanagan appeared on behalf of all of the claimants and gave sworn witness testimony. He also provided written information about the circumstances leading to the termination of the claimants’ employment. This was contained in the ET1 and also in two summaries prepared by Mr Flanagan that stood as his witness statement before the tribunal. Those summaries formed part of a bundle of 77 pages that was also before the tribunal.
Findings of fact
[12]I make the following findings of fact.[13]At the time the claimants were dismissed, there were more than 20 employees working for the first respondent at each of its two sites at Amington Road, Birmingham (where 22 employees worked, all of whom were dismissed) and Unit B, Redfern Park Way, Tyseley, Birmingham (where 112 employees worked, all of whom were dismissed).[14]On 26 January 2024 the claimants were informed verbally at a collective staff meeting that they were being made compulsorily redundant which they were told was unavoidable as a result of the insolvency and the entering into of administration by the first respondent. The first respondent had appointed administrators on the previous day, being 25 January 2024.[15]Most of the claimants were dismissed with immediate effect on 26 January 2024, although a small group of 10 employees continued to work for the first respondent for a few days thereafter. Mr Flanagan was the last employee to leave, at the end of January 2024.[16]The claimants conciliated via ACAS between 12 and 13 February 2024. Having checked the dates of early conciliation and presentation of the claim form, I find that the Claims were all presented (or early conciliation was started) within three months of the date of dismissal (or within a month of conciliation terminating). The Claims were all therefore presented within the time limits set out in section 189 (5) of TULRCA.[17]The effect of section 195 (2) TULRCA is that where an employee is or is proposed to be dismissed, it shall be presumed, unless the contrary is proved, that he is or is proposed to be dismissed as redundant. I find that all of the claimants were indeed dismissed by reason of redundancy.[18]I also find that 20 or more employees were employed by the first respondent at each of the first respondent’s two establishments as at 25 January 2024, being the date on which redundancies were first proposed. I also find that the claimants were among those employees employed by the first respondent prior to the dismissals taking effect. All employees of the first respondent were assigned to one or other of these two establishments.[19]The first respondent did not have a recognised trade union at the relevant time. There had, in the past been a staff council, but this was no longer used by the first respondent. I find that the staff council no longer existed and that, as at 25 January 2024, there were no employee representatives.[20]No attempt was made to elect representatives with whom the first respondent could consult or attempt to consult. No consultation took place prior to the dismissals. I find that the meeting at which the claimants were notified of their dismissals lasted no more than 15 minutes and was merely intended to convey to the claimants what had alredy been decided as regards their dismissals.[21]On 4 March 2024, the adminstrators of the first respondent gave consent to the claimants pursuant to paragraph 43(6) of Schedule B1 of the Insolvency Act 1986 to commence the Claims, on the basis that the Claims related to the seeking only of a protective award and that the claimants a) would not seek to enforce any judgment against the first respondent or its assets, b) understood that no element of the Claims would rank as an expense of the administration and c) recognised that the administrators acted as agents of the first respondent and had no personal liability.[22]Although the first respondent did not file a response to the Claims, it was specifically asked by the tribunal to confirm if the administrators contended that there were special circumstances such as rendered it not reasonably practicable for the first respondent employer to have complied with ss.188 and/or 188A of TULRCA, and if so, what those circumstances were.[23]Tho first respondent responded to this question by e-mail. On behalf of the first respondent, it was submitted by the administrators that the first respondent had experienced reduced sales and trading losses which had impacted cash flow. There had been conversations with two competitors around the purchase of the business as a going concern, but these had not resulted in a sale. In addition, due to the high costs of occupation and the first respondent’s license to occupy being terminated, the administrators felt they had no option other than to vacate the premises, with the result that the premises were handed back to the landlord and the remaining staff were made redundant.[24]The first respondent did not provide any evidence to back up its submissions.[25]Mr Flanagan challenged the first respondent’s submissions in his evidence. He stated that business was improving and that the first respondent’s cashflow was typically under pressure in January and February. The first respondent could have approached its bankers or looked at invoice factoring to provide liquidity. He also submitted that conversation with the landlord around the first respondent’s occupation of its business premises had been positive and that the landlord was surprised when the first respondent entered administration.[26]Although I accept that Mr Flanagan had been a senior employee of the first respondent and would have had knowledge of operational and financial matters, I find that decisions on entering administration were for Mr Lakin, who had ultimate control over decision making for the first respondent, to take.[27]That said, I do not accept that the decision to close the first respondent was made as a result of events that took place on or very shortly before the 25th of January, when Mr Flanagan was asked by Mr Lakin to call the staff meeting at which the redundancies were announced. To the contrary, I find that the financial issues with the first respondent had been ongoing for some time. I find that Mr Lakin did not have the support of his fellow directors in the group of companies of which the first respondent was a part. The first respondent itself had been incorporated to acquire the assets of an earlier company under Mr Lakin’s control that had entered into what is colloquially known as a ‘pre-pack’ administration. I also find that the seasonal dip in trading experienced by the first respondent in early 2024 was, as Mr Flanagan contended, predictable.[28]I therefore find that there had been sufficient time for the first respondent to have engaged in collective consultation prior to dismissing employees by reason of redundancy. Legal analysis and conclusions[29]As to who may bring a complaint pursuant to s. 188 or 188A to an Employment tribunal, s.189 (1) Trade Union and Labour Relations (Consolidation) Act (as amended) (“TULRCA”) states: - (a) in the case of a failure relating to the election of employee representatives, by any of the affected employees or by any of the employees who have been dismissed as redundant; (b) in the case of any other failure relating to employee representatives, by any of the employee representatives to whom the failure related, (c) in the case of failure relating to representatives of a trade union, by the trade union, and (d) in any other case, by any of the affected employees or by any of the employees who have been dismissed as redundant.[30]I have considered Independent Insurance Co Limited v Aspinall [2011] IRLR 716 and the earlier decision of the Court of Appeal in Northgate v Mercy [2008] IRLR 222. Neither a recognised union nor employee representatives were in place and the complaints therefore fall within s.189(1) (a) (or (d)) of TULRCA.[31]I therefore find that the employees have standing to make the Claims. The claimants each individually pursued a valid claim.[32]The main relevant provisions of TULRCA are as follows: - s.188 (1): Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals. s.188 (1A): The consultation shall begin in good time and in any event-(a) where the employer is proposing to dismiss 100 or more employees as mentioned in subsection (1), at least 45 days, and(b) otherwise, at least 30 days, before the first of the dismissals takes effect. s.188 (1B): For the purposes of this section, the appropriate representatives of any affected employees are- (a) if the employees are of a description in respect of which an independent trade union is recognised, representatives of that trade union, or (b) in any other case, whichever of the following employee representatives the employer chooses:- (i) employee representatives appointed or elected by the affected employees otherwise than for the purposes of this section, who (having regard to the purposes for and the method by which they were appointed or elected) have authority from those employees to receive information and to be consulted about the proposed dismissals on their behalf; (ii) employee representatives elected by the affected employees, for the purpose of this section, in an election satisfying the requirements of section 188A (1). s.188 (2): The consultation shall include consultation about ways of- (a) avoiding the dismissals, (b) reducing the numbers of employees to be dismissed, and(c) mitigating the consequences of the dismissals, and shall be undertaken by the employer with a view to reaching agreement with the appropriate representatives. and s.188 (7): If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with a requirement of subsection (1A), (2) or (4), the employer shall take all such steps towards compliance with that requirement as are reasonably practicable in those circumstances. Where the decision leading to the proposed dismissals is that of a person controlling the employer (directly or indirectly) a failure on the part of that person to provide information to the employer shall not constitute special circumstances rendering it not reasonably practicable for the employer to comply with such a requirement. s.188A The requirements for the election of employee representatives under section 188 (1B) (b) (ii) are that – (a) the employer shall make such arrangements as are reasonably practical to ensure that the election is fair; [(b to (h) make detailed provision for the elections, including secret voting and accurate counting of votes].”[33]I am satisfied that the first respondent failed to comply with its obligation to consult as required by s.188 and, in order to allow such consultation to take place, failed to elect representatives in accordance with s.188A. Accordingly, I find the claimants’ complaints to be well-founded.[34]By virtue of s.189 (2) TULRCA, in such circumstances I may make a protective award. If I do, the statute provides as follows: - (4) The protected period –(a) begins with the date on which the first of the dismissals to which the complaint relates takes effect, or the date of the award, whichever is the earlier, and(b) is of such length as the tribunal determines to be just and equitable in all the circumstances having regard to the seriousness of the employer’s default in complying with the requirement of section 188; but shall not exceed 90 days.”[35]Accordingly, I find the protected period in relation to the Claims commenced on 26 January 2024, being the date on which the first dismissals took effect.[36]As to the length of the protected period, the case of Susie Radin Limited v GMB and Others [2004] IRLR 400 [45] gives the following guidance: - I suggest that ETs, in deciding in the exercise of their discretion whether to make a protective award and for what period, should have the following matters in mind:(1) The purpose of the award is to provide a sanction for breach by the employer of the obligations in s.188: it is not to compensate the employees for loss which they have suffered in consequence of the breach.(2) The ET have a wide discretion to do what is just and equitable in all the circumstances, but the focus should be on the seriousness of the employer's default.(3) The default may vary in seriousness from the technical to a complete failure to provide any of the required information and to consult.(4) The deliberateness of the failure may be relevant, as may the availability to the employer of legal advice about his obligations under s.188.(5) How the ET assesses the length of the protected period is a matter for the ET, but a proper approach in a case where there has been no consultation is to start with the maximum period and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the ET consider appropriate.[37]In this case there was no consultation or attempt to comply with the statutory consultation provisions.[38]A respondent may be excused compliance with the requirements of TULRCA if it can satisfy section 189 (6).[39]TULRCA 189 (6) states; If on a complaint under this section a question arises—(a) whether there were special circumstances which rendered it not reasonably practicable for the employer to comply with any requirement of section 188, or(b) whether he took all such steps towards compliance with that requirement as were reasonably practicable in those circumstances, it is for the employer to show that there were and that he did.[40]Although the first respondent’s submissions as provided to the tribunal on this point explain why the first respondent entered administration, I do not find that there are any special circumstances which rendered it not reasonably practicable for the first respondent to have complied with its obligations of collective consultation. For completeness, even if there were, I find that the complete failure on the part of the first respondent to engage in any form of consultation represents a failure to take all such steps as were reasonably practicable in the circumstances.[41]The starting point for the assessment of the protective award is the maximum, 90 days, and whilst I have a wide discretion to do what is just and equitable, in the absence of any evidence that points to the first respondent attempting to comply with its obligations or of any mitigating circumstances, I conclude there are no grounds for me to reduce the same and the protective award shall therefore be set at the maximum of 90 days.