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P NEWS EXTRA

5th February 2009
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Which of the following most accurately describes the problem?

Keeping staff informed is key to complying with law

Staff at failed hauliers E Pawson & Son and Macfarlane Transport were awarded compensation because they were not given sufficient notice that they were going to be made redundant. How is the decision reverberating across the industry?

Words: Roanna ANn, MOST HAULIERS that go into administration will be given little warning the company has to close, and if they have an inkling things are not going well, one of the last things they will have thought about is giving staff notice. However, two employment tribunal rulings last month (*Payouts for Macfarlane and E Pawson workers', CM 22 January) highlighted the fact that giving employees the relevant amount of notice is something they need to keep in mind. Staff at defunct hauliers E Pawson & Son and Macfarlane Transport were awarded compensation by an employment tribunal because they were not given enough notice they were to be made redundant.

E Pawson went into administration in April (*Fuel costs add to another collapse', CM 17 April 2008), while Macfarlane called in the administrators in July ("Large-scale redundancies inevitable" at Macfarlane', CM 10 July 2008). In both cases, employees were not given any warning about the company failures and therefore their redundancies, affecting 270 Macfarlane staff and 185 Rawson staff.

In both cases, Leeds Employment Tribunal granted protective awards to employees, which means all the staff made redundant will be entitled to make a claim against the governmentrun Redundancy Fund. Although these were landmark cases and employees were compensated, the awarded money came from the government and not the failed hauliers.

However, the fact that hauliers facing financial difficulties have to give up to three months' notice to staff that they may be made redundant has been met with a scathing response from law firm Backhouse Jones.

Unrealistic Steven kleyerhoff, head of Backhouse Jones' employment department, argues it is unrealistic to expect an operator to know it is likely to fail in three months.

"While you can often look hack once it has happened and see how things

have declined, when a company is actually trading, it is difficult to forecast what might happen in 90 days' time."

He adds this is because most managers are caught up with the day-to-day operations of the firm and are unable to step back to see the bigger picture.

"If an operator did make staff aware there were financial difficulties within the required notice period, it could mark the death knell for the company. Staff are unlikely to hang around to find out if the company manages to pull through."

An administration firm that didn't want to be named also questioned how feasible it is to tell staff up to three months before a haulier goes into administration. "When we are called into a company, one of the first things we do is decide whether we can keep staff on or not. It would make our lives very difficult if we have to give those staff one month or three months' notice. Normally, we would make staff redundant as soon as we can if that is the right thing to do for any particular firm."

Onus on companies

However, Jayne Ph ill ips, partner at Morrish & Co Solicitors, which backed both cases. insists the law does not place too big an onus on companies because most will know they are in financial difficulty before calling administrators.

"The Trade Union and Labour Relations Act (Consolidation) 1992 placed on employers the duty to consult staff if they are contemplating redundancies of 20 or more people in one workplace. "They are required to talk to the registered union representative or appoint a representative from among the employees if no union is present. They are then meant to consider ways of avoiding the dismissals or reducing the number of jobs that will be lost."

While many operators would argue that going into administration must be considered a special circumstance that should sit outside the employment reg

ulations. Phillips says:"In previous cases the courts have ruled this notice period can be avoided in special circumstances but decided that insolvency does not count as a special circumstance.

"'this is because, at some point before the insolvency, the employer should know the jobs are at risk," Phillips says.

Ruth Pott, director of employment affairs at the Road Haulage Association, agrees with Phillips and believe: most hauliers will know about the legislation and be aware that it still applies ii they are in financial difficulty.

Admit problems

"Given the economic climate. mos' hauliers will know things are tough anc will be able to give staff the warning they are required to give."

The answer for struggling haulier: could be to admit problems to staff anc keep them informed of how they an addressing the issues they are facing. •


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