An employment tribunal has decided that the administrators failed in their duties to consult staff about redundancies when presiding over the closure of the Woolworths chain of stores in late 2008. It is often difficult for administrators to reconcile their duties to consult collectively with their other legal responsibilities. In this case, however, the tribunal found that despite the pressures the administrators faced they should have consulted union officials and other staff representatives earlier and more comprehensively. As a result, around 27,000 staff are entitled to a protective award of 60 days' pay, which aggregates at over £60 million.
Appeals are possible - particularly on the union side over the exclusion of staff from smaller stores from the award, but the broad brush lessons are fairly clear. Failing to consult, adequately, even in the most challenging circumstances, can result in a large compensation bill. If, as in this case, the company is insolvent, most if not all the liability will be picked up by the taxpayer via the Insolvency Fund.