Food for thought – the implications for employers from Jamie Oliver’s employment case

Viewers of American legal dramas (other than that coming out of the White House) – for example, The Good Wife or How to Get Away with Murder – will be familiar with the much-lauded “class actions” and the relish with which they are pursued by the legal protagonist of the show. Class actions can be (and are) pursued in the English courts as well, although perhaps with less pomp and ceremony than across the pond, and it now seems that one such class action is heading Jamie Oliver’s way following his UK restaurant group going into administration in May 2019.

A Lancashire based law firm has now confirmed that it is representing around 70 people who were made redundant from Jamie Oliver’s in-administration businesses, with more joining daily.

What are they intending to claim?

The main thrust of the action appears to be that the redundant employees were denied the required 30-day consultation period before being dismissed.
Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (‘TULRCA’) states that where an employer is proposing to make 20 or more employees redundant within a period of 90 days or less, it must consult on that proposal with representatives of the affected employees.
If that same employer is proposing to make fewer than 100 redundancies, then it must begin the consultation period at least 30 days before the first dismissal takes effect. For more than 100 redundancies, this minimum consultation period increases to 45 days.
TULRCA requires the redundancies to be made at “one establishment” so, although it is estimated that nearly 1000 redundancies resulted from Jamie Oliver’s UK restaurants going into administration because these likely occurred over different establishments, there were presumably fewer than 100 redundancies per establishment.

What could be the cost?

An employer who fails to comply with its consultation obligations under TULRCA faces the possibility of a protective award being made in favour of each and every employee denied their minimum consultation period. This protective award is up to 90 days’ gross pay for each dismissed employee. So, with nearly 1000 redundancies, this could be a bill that proves to be less than ‘pukka’.

Is there a defence?

Yes, there is a “special circumstances” defence that can be put forward and will almost certainly be argued in response to this planned action. However, this does not absolve an employer completely.

How does the defence work?

It may be possible to argue that there were special circumstances which rendered it not reasonably practicable for the minimum period of consultation to have been met before the first dismissal and that, instead, they took “all such steps towards compliance with that requirement as [were] reasonably practicable in those circumstances”. In other words, they did what they could and gave due deference to their legal obligations.

This is the employer’s burden to prove.

What are special circumstances?

There is no hard and fast rule about what amounts to “special circumstances”. This means that an Employment Tribunal will have to judge any such defence on the specific facts of the case.
A possible difficulty in defending the planned action against those businesses of Jamie Oliver’s that have gone into administration (not all of them have) is that insolvency is not a special circumstance of itself – if it was then this would drive a coach and horses through the TULRCA protection. That being said, special circumstances can arise as a result of insolvency, for example, a “sudden disaster” could amount to a special circumstance because it would be “something out of the ordinary” whereas a “gradual run-down of the company” due to financial difficulties would not be.

Comment

If the planned action against Jamie Oliver’s in-administration businesses does go ahead then the Employment Tribunal (‘ET’) will need to carefully scrutinise:

1. Whether the minimum consultation period as required by section 188 of TULRCA was met; and

2. If not, whether there are “special circumstances” that make it reasonable for that minimum consultation period to have not been met.

If it is found that “special circumstances” do exist then the ET will need to decide what impact that has on the level of any protective award. In Susie Radin Ltd v GMB [2004], the Court of Appeal made clear that where there has been no consultation at all, it would be appropriate for a tribunal to start with the maximum permitted protective award (90 days’ gross pay) and then examine any mitigation that might justify a reduction being made. So, any “special circumstances” would then be taken into account as mitigation.

If, in the case of Jamie Oliver’s businesses, there was at least some form of consultation then the maximum permitted protective award would not be the appropriate starting point. The Employment Appeal Tribunal made clear that the Court of Appeal in the Susie Radin case was referring to that maximum starting point for when an employer had done nothing at all to comply with its obligations.

A protective award is intended to be punitive and serves to deter employers from ignoring their legal obligations. As such, it will be the seriousness of the breach that an Employment Tribunal will focus on, not the actual loss suffered by the employees.

We will watch this case with interest.