In this case, the EAT held that an employer that entered into administration had been proposing to dismiss as redundant 20 or more employees within a 90 day period, such that it ought to have conducted collective consultation, and the affected employees were entitled to a protective award.
Background
Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) requires employers to carry out collective consultation where they are proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days.
An employer that fails to comply with collective consultation requirements may be liable for a protective award under section 189 of TULRCA. At the time of the events in this case, the maximum protective award was 90 days' pay per affected employee.
When administrators are appointed and a company enters administration, the administrators take over responsibility for day-to-day management of the company. The Insolvency Act 1986 requires the administrators to fulfil one of the following three objectives:
- Rescuing the company as a going concern
- Achieving a better result for the company's creditors as a whole than would be likely if the company were wound up without first being in administration
- Realising property in order to make a distribution to one or more secured preferential creditors
Facts
Alliance Transport Technologies Ltd (ATT) was a company which manufactured parts for electronic and hybrid commercial vehicles. It employed approximately 51 employees. Having received investment at the end of 2021 to fund new product development, ATT began to experience financial difficulties in early 2023. The directors sought to secure additional investment or sell the business as a going concern. However, on 14 and 27 April 2023, ATT filed notices of intention to appoint administrators.
On 2 May 2023, administrators were appointed with an initial short term strategy of continuing to trade while seeking a buyer for the business. On the same day, 15 employees who were identified as non business critical were dismissed as redundant. On 5 May 2023, the final interested party confirmed that it would not proceed with the potential purchase of the business. The majority of the remaining employees were dismissed as redundant on that date, and the administrators commenced the winding down of the company.
Nine of ATT's employees brought claims in the employment tribunal seeking a protective award. The tribunal made a protective award of 90 days' pay for each of the six claimants who were dismissed on 5 May 2023. However, the tribunal held that the three claimants who were dismissed on 2 May 2023 were not entitled to a protective award because, at the date of their dismissal, ATT did not have a proposal to dismiss 20 or more employees at one establishment within a 90 day period. Those three claimants appealed.
The EAT allowed the appeal and substituted a decision that the claimants dismissed on 2 May 2023 were entitled to a protective award of the same amount as those who were dismissed on 5 May 2023.
The tribunal had applied the wrong legal test. The question is not whether there was a fixed, certain proposal at a set point in time, but whether, during the relevant time, the employer was proposing to dismiss 20 or more employees within a 90 day period.
Identifying whether the trigger conditions for collective consultation were met requires an analysis of what was taking place within the organisation at different points in time. This may be difficult in administration and insolvency cases, where decisions may be taken very quickly, and employers may wish to avoid publicising their difficulties. Where dismissals take place at separate points in time, the focus should be on whether it is proposed that the requisite number of dismissals should occur in the future, albeit over a lengthy period of time.
The tribunal in this case had erred in finding that it did not matter whether there was a high, medium or low prospect of the business being sold as a going concern at the time the claimants' dismissals took place. In doing so the tribunal excluded from its analysis the question of whether there was an intent that the business would close unless it could be sold as a going concern.
The administrators' report clearly set out that, when the administrators were introduced to the business, there was an intention to sell the company as a going concern. However, by the time the administrators were appointed on 2 May 2023, the first of the statutory objectives under the Insolvency Act 1986, rescuing the business as a going concern, could not realistically be met, and the administrators therefore worked towards the second objective, winding up the business while maximising compensation for creditors.
The EAT therefore held that the tribunal's judgment was perverse. As at 2 May 2023, when the administrators were appointed and the claimants were dismissed, it was very likely that the business would close if a sale to the one remaining interested party could not be achieved. There was therefore a fixed, clear, albeit provisional intention to dismiss as redundant more than 20 employees within a 90 day period. There had been no consultation as required under TULRCA, and the claimants were entitled to a protective award.
What does this mean for employers?
Failure to comply with collective consultation requirements can result in significant liability for employers, particular since the maximum amount of the protective award increased on 6 April 2026 from 90 to 180 days' pay per affected employee, under the Employment Rights Act 2025. Employers assessing whether the duty to conduct collective redundancy consultation is triggered should therefore pay heed to the guidance provided in this case. The duty to consult will not arise where closure of a business is merely mooted as a possibility. However, it will be triggered where closure is established as a clear, albeit provisional, intention - even if other possible options are still being considered.
The judgment in this case has only recently been published, but the case was heard in October 2025, before the decision in the well-publicised case of Micro Focus Ltd v Mildenhall (which we reported on here). Taking these two decisions together, it seems clear that:
- The test for identifying whether collective consultation is required is forward looking, so employers are not required to look backwards to past dismissals when considering whether a new proposal meets the relevant threshold
- "Proposing to dismiss" involves current and ongoing consideration of future events, albeit events which are not certain, and may occur over a relatively lengthy period of time - so the concept of "proposing" should not be given a narrow temporal meaning
Case: (1) Ellard (2) Hulse (3) Warren v Alliance Transport Technologies Ltd
