High street retailer Wilko entered administration in 2023 and announced that it would be closing all 400 of its stores across the UK, making more than 12,000 of its staff redundant in the process.
Two years on, Wilko has once again found itself making headlines as an employment tribunal ruled that it must pay out £2 million in a protective award to nearly 10,000 of its former staff, after failing to properly consult them ahead of redundancies.
Despite difficulties the retailer was facing behind closed doors, this ruling is a stark reminder to employers of their duty to comply with employment law and ensure their employees are treated fairly throughout any redundancy or restructuring processes.
What went wrong?
GMB Union brought an employment tribunal case against Wilko after the retailer failed to meet adequate consultation periods before redundancies. At the time, some staff told news outlets that they found out about upcoming redundancies through updates in the press, rather than by their employer.
The employment tribunal found that although a consultation period did take place with Wilko staff, it started too late and therefore did not meet its legal obligations.
As a result, around 9,000 former staff who worked in a store with 20 or more people will get four days pay, while more than 1,000 distribution centre and support centre workers will receive 13 days pay.
What should have happened?
Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) details the legal requirements for collective redundancy consultation, which comes into action when an employer plans to make 20 or more employees redundant during a 90 day period.
There is no upper limit for how long a period of consultation should last, but it should start a minimum of 30 days before dismissals take effect in cases with 20 to 99 redundancies, while those with 100 or more redundancies require a consultation period of at least 45 days.
Employers should provide written details to representatives or staff of the reasons for redundancies, numbers and categories of employees involved, numbers of employees in each category, how employees will be selected for redundancy, how redundancies will be carried out and how redundancy payments will be worked out.
Mistakes to avoid
A period of redundancy or restructuring can be a stressful time for all involved, however that does not recuse employers of their obligations to their staff.
As in Wilko’s case, leaving the consultation too late leaves employers open to employment tribunal claims which can lead to large payouts for affected staff.
A company going through insolvency has the same responsibilities as a company undergoing restructuring and minimum consultation periods must still be met.
It is worth noting that should action be taken further down the line, employment tribunals assess both the quality and timing of consultation. Therefore, it is important to create clear channels of communication between staff or representatives, as well as complying with required timelines.
What can employers learn from this?
Businesses at risk of redundancy or restructuring should seek early legal advice to ensure that they are complying with all legal requirements.
Early planning ensures adequate time to fulfil obligations and engage fully with staff or representatives. Companies should keep documentation at every stage to evidence efforts and timelines.
Protective awards, as in Wilko’s case, can be both costly and reputationally damaging. With expert guidance, legal risk can be avoided and staff treated with dignity during what can be an incredibly stressful time.
Restructuring or making redundancies can be extremely complex and it is vital to seek the advice of an employment solicitor from the beginning of the process to avoid costly mistakes that could lead to employment tribunal claims.
Mincoffs Solicitors has extensive experience in working with businesses facing restructuring and redundancies and can provide clear, informed advice throughout every stage of the process.
For more information about redundancies, or any other employment law matter, email partner and head of employment Nick Smith on nsmith@mincoffs.co.uk or call the office on 0191 281 6151 to speak to a member of the team.
