Are Thomas Cook’s ex-employees entitled to an additional ‘protective award’ following the travel giant’s collapse?
The effect the collapse of holiday giant Thomas Cook has had on its customers has dominated the headlines since the company entered into compulsory liquidation on Monday 23 September 2019 but here we’re going to take a closer look at the impact the company’s demise is likely to have on its employees.
Unfortunately, the immediate effect of compulsory liquidation is to automatically end the employment of every member of staff. However, all is not lost. Employees can apply to the Insolvency Service for redundancy and other payments including pro-rata’d holiday pay, unpaid wages and statutory notice pay.
Currently more than 100 former Thomas Cook employees are preparing to launch legal action against the collapsed travel firm over the way that they lost their jobs. If the company is found to have failed to follow the correct redundancy consultation process, their staff could well be entitled to an additional ‘protective award’.
What is a protective award?
A ‘protective award’ is a payment an Employment Tribunal can order an employer to pay to its employees under TULRCA (the Trade Union and Labour Relations (Consolidation) Act 1992).
The award is designed to punish the employer where it has failed to inform and consult with its staff when proposing to make 20 or more redundancies.
Who can benefit from a protective award?
Subject to any exclusions, the protective award can cover any employee:
• Whom the employer has dismissed or proposed to dismiss as redundant; and
• In respect of whom the employer has not properly consulted in accordance with s188 of TULRCA.
A protective award is separate compensation from the basic redundancy award although both would be paid by the government’s Insolvency Service if the employer has gone under.
Ex-employees, however, can only claim a protective award if they were made redundant alongside at least 19 other people at the same place of work. Sadly, that would exclude staff from smaller Thomas Cook stores.
If the claims are successful, each former employee could be entitled to up to 90 days’ gross pay, the maximum the Tribunal can award although the Tribunal would have to deem that level of award to be “just and equitable” in the circumstances.
And this isn’t the first time protective awards of this magnitude have been sanctioned. In 2012 the National Insurance Fund took a massive hit when Woolworths entered into administration and around 24,000 of their former employees received a combined award of approximately £67.8m. Given the likelihood more former Thomas Cook employees will make a claim, this only highlights just how crucial it is for any struggling business to make a genuine attempt at redundancy consultation, especially if 20 or more staff are at risk.
The Thomas Cook collapse has effected many people and their jobs.
If you would like to find out more about how to manage potential redundancies in your business or have found yourself facing possible redundancy and want to make sure you have been offered the required consultation, please email email@example.com or call Charlotte on 0114 290 6286.