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Calculating a protective award
The purpose of a protective award is not to compensate employees for the loss they have suffered, but to punish the employer for failing to consult (Susie Radin v GMB and others [2004] IRLR 400), followed in Shields Automotive Ltd v Langdon [2013] UKEAT/0059/12/2103). For this reason, it is irrelevant whether or not individual employees have lost out financially as a result of the failure to consult. As the award is punitive and not compensatory, what matters is the seriousness of the employer’s breach of its consultation duty.
The award can be up to 90 days’ pay and tribunals should use this as their starting point before examining the surrounding circumstances to see whether there is any justification for reducing it (T&G v Morgan Platts EAT/0646/02). This maximum applies even if the minimum consultation period was 30 days.
A tribunal made a protective award of 80 days’ pay to members of the T&G general union after their employer failed to consult over the proposed redundancy of 30-35 workers. The employer argued that the award was too high, given that the mandatory period of consultation for 20 to 99 redundancies is only 30 days. The EAT held that a protective award of up to 90 days’ pay can be made even when fewer than 100 employees are to be made redundant.
Newage Transmission v TGWU EAT/0131/05
The government has confirmed that it has no plans to reduce the maximum 90-day protective award, even though it has cut the statutory consultation period for large-scale (100+) redundancies to 45 days.
Except in cases of insolvency, protective awards are calculated using actual earnings and there is no statutory cap. This means that especially in large-scale redundancies, protective awards can be very large indeed. The threat of a protective award can be a potent weapon to force a reluctant employer to engage in proper consultation with a recognised union.