Canadian Imperial Bank of Commerce v Beck UKEAT/0141/10

If an employer fails to consult on its proposed large scale redundancies with representatives of its affected employees then a tribunal may make a protective award to each of the employees for a specified period. The award is capped at 90 days’ pay but there is no statutory maximum on a week’s pay.

In this case, the Bank had been in breach of the statutory provisions and the tribunal held that a protective award of 90 days’ pay was appropriate for Mr Beck. The tribunal then had to decide whether the protective award should be calculated by reference to his basic salary, which would have amounted to some £45,000 or should include an assessment of what his true remuneration was at the date of the dismissal, namely his salary plus his eligibility for a substantial but discretionary bonus. Mr Beck argued that as a protective award is an effective sanction, without taking into account his discretionary bonus then the deterrent value of the protective award was largely lost.

Mr Beck’s annual salary at £125,000 was much less than his likely discretionary bonus, but as his right to a bonus had not crystallised at the time of the time of the dismissal, the appeal Tribunal was right to hold that this bonus should not form part of his week’s pay.

Key point: The case is a reminder that collective consultation in a redundancy exercise if not carried out properly can be costly for an employer.