Calculating the protective award

The maximum protective award a tribunal can make for failure to consult is 90 days’ pay per affected employee. Reps should note that the cut in the statutory minimum collective consultation period from 90 to 45 days where 100 or more redundancies are proposed has had no effect on the maximum protective award, which remains 90 days’ pay. This is because the purpose of the award is to punish the employer (Newage Transmission v TGWU UKEAT/0131/05).

Unless the employer is insolvent, there is no statutory cap to a week’s pay when working out a protective award. Instead, the award is calculated using actual gross weekly pay. This means that in large redundancy exercises, protective awards can run to many millions of pounds.

Awards where the employer is insolvent are more limited. Like all payments by the Redundancy Payments Office, protective awards are capped at a maximum weekly rate which increases each year. This is currently £450 (2013-14). The RPO treats the protective award as wages, and since wages are already capped at a maximum of eight weeks, this means that where an employer is insolvent, only the first 56 days of any protective award can ever be paid out. The payment is also reduced by the amount of any wages already paid out under the scheme. For more information, see Chapter 7: Redundancy payments.