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Protective Awards

Employers who fail to comply certain legal obligations may be liable to pay substantial ‘protective awards’.

Protective awards are intended to punish employers for failing to comply with legal obligations. They apply to each affected employee and thus can add up to substantial amounts.

Where an employer proposes to dismiss, as redundant, 20 or more employees at one establishment in any 90 day period it must comply with the provisions of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULCRA”).

If an employer fails to comply with its collective consultation obligations under TULCRA (further information on collective consultation obligations can be found here) an Employment Tribunal may make a protective award. A protective award requires an employer to pay a specified sum to its employees of up to 90 days’ gross pay per employee. There is no cap on an employee’s pay for these purposes.

It will be for a Tribunal to decide how much any protective award should be. As a general rule of thumb where no consultation whatsoever has taken place, a Tribunal’s starting point will be the full 90 days’ pay. The Tribunal will then consider whether this amount should be reduced to reflect any mitigating circumstances for example, third party pressures or where representatives were unwilling to participate. The greater the extent to which the employer has attempted to comply with TULCRA the lower a protective award is likely to be.

Nevertheless, given the absence of a cap on pay combined and the number of employees potentially involved, employers would be well advised to take all steps to avoid the risk of a protective award being made.

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