Awards in insolvency

Case 5: The facts

Corrine Smith and Anne Moore were made redundant without consultation when their employer went into receivership. A tribunal held that they were not entitled to a protective award; the purpose of such an award is to punish the employer, but in this case the payments would be made by the secretary of state.

The ruling

The Employment Appeal Tribunal (EAT) held that the employees were entitled to the protective award, based on the seriousness of the failure to consult and not on the employer's inability to pay. The EAT awarded the maximum protective award of 90 days' pay.

Smith and Moore v Cherry Lewis [2005] IRLR 86

Case 6: The facts

José Valero was unfairly dismissed and agreed compensation through a settlement agreement. But his employer was declared insolvent and he had to apply to the state to recover his pay.

The issue was whether he was entitled to compensation that had been agreed through conciliation rather than awarded by a court.

The ruling

The European Court of Justice held that it was for the national court to decide whether "pay" that can be recovered from the state on insolvency includes compensation for unfair dismissal. If so, it does not make a difference whether it results from a court judgment or a conciliated settlement.

Valero v Fondo de Garantia Salarial (Fogasa) Case C-520/03