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The appointment of administrators
Where an employer is in financial difficulty and administrators have been appointed, the administrators are under the same statutory duty to inform and consult with employee representatives as the original employer.
Administrators who fail to consult will incur liability for a protective award. This is paid by the Redundancy Payments Office. However, the amount of this protective award is limited and securing payment is complicated, as reps from the RMT discovered in the 2010 collapse into administration of the Jarvis Group:
The Jarvis Group collapsed in 2010 with the loss of around 1,200 jobs. Railway workers unions TSSA and the RMT were awarded compensation of around £3,000,000 in the Leeds Employment Tribunal including a protective award for complete failure to consult, described by Brian Brock, regional organiser for the TSSA, as probably the worst example he had seen.
Mr Brock told LRD how the first indications of the impending collapse came not from the company but from the media. Administrators announced the redundancies without warning or consultation, as soon as it became clear that the government would not step in to help fund a rescue.
For more information see Chapter 7: Redundancy and insolvency.