The judgement, which was issued by the Plymouth Employment Tribunal last week, means the 47 staff that made a claim are each in line for additional payments of up to £4,304.
Presiding judge NJ Walker issued the judgement “by consent”, but the employees' solicitor, Nuala Toner, managing director of employment specialist Nualaw, said that initially the administrators were going to defend, but agreed to a judgment by consent “after we pointed out that the defense was not particularly strong”.
130-year-old Latimer Trend fell into administration last October. Companies often claim “special circumstances defense” when insolvency is involved, however this has largely been rejected in previous cases.
“Otherwise every company that was in financial difficulties would just say we couldn’t do it [consult], because we went into administration,” said Toner.
A judgement by consent is where all the parties agree the terms in which a judgment should be given. Following the agreement, the former employees dropped various other claims against the company including some for unfair and constructive dismissal.
Toner said that a tribunal judgement was required in order for staff to receive compensation from the government.
“It’s not something that former staff can apply for on their own,” she said.
“So, people that didn’t make a claim, so those beyond the 47, won’t receive anything.”
The £10m-turnover book and journal printer had employed 83 staff at the time it fell into administration.
Under the Trade Union and Labour Relations (Consolidation) Act 1992, when more than 20 staff are made redundant within a 90-day period, there needs to be a 30-day consultation period and if a business fails to do that then it can be ordered to pay up to 90-days compensation to the affected staff.
In this instance, where the company in question is in administration, the first eight weeks of the compensation, capped at £538 per week, is payable by the National Insurance Fund (NIF) through the Insolvency Service’s redundancy payment service.
The remaining amount rests as an unsecured claim against the assets of the collapsed business.
In the case of Latimer Trend, which owed unsecured creditors more than £3m at the time of its administration, and had an estimated total shortfall in excess of £4.5m, Toner said it was “pretty unlikely” that the employees will receive any further payment beyond that from the NIF.
The payments due under the judgement are in addition to the employees' claims for statutory redundancy, arrears, notice and holiday pay from the government.
While administrators usually highlight employees’ rights for statutory pay claims, many workers are unaware they may be eligible to make a further claim for not having had a formal consultation before being made redundant by their employer.
“We do this type of work all the time, but our hit rate is normally only around half of the employees that are entitled to claim, because a lot of people think you have to have two years’ service, but you don’t, or they just think there’s no money left so there’s no point,” said Toner.
“They don’t realise that there’s money there from the National Insurance Fund, which they’ve paid into every week of their working life… there are also lots of instances where employees don’t make claims simply because they’re not aware they can.”
Claims largely involve companies that have gone into administration, where the directors haven’t consulted with staff because they were concerned about devaluing the company or unsettling customers while they attempt to save or sell the business.
“It’s very often that the staff are the last people to know,” said Toner.
“But it is against the law and you are meant to tell people, they’re supposed to have a representative who can speak on their behalf, they’re supposed to have time off to look for a job and [in extreme cases] it can also have a big socioeconomic impact on a town.
“So, directors have to give forewarning.”
