In Ellard and Ors v Alliance Transport Technologies Ltd, the business experienced serious financial difficulties. In April 2023, Alliance filed notices of intention to appoint administrators while attempts were made to sell the business as a going concern.
The administrators were appointed on 2 May 2023. On that day, 15 employees were dismissed as redundant. A few days later, on 5 May 2023, it became clear that no sale would proceed and most of the remaining workforce of 51 employees were dismissed. Three of the employees dismissed on 2 May 2023 brought Employment Tribunal ("ET") claims for protective awards, arguing that the duty to collectively consult had arisen before their dismissals and Alliance failed to collectively consult with them.
The duty to collectively consult arises where an employer “proposes to dismiss” as redundant 20 or more employees at one establishment within a period of 90 days or less under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. An ET can award a protective award to each employee of up to 180 days’ pay (recently increased from 90 days’ pay) for a failure to follow collective consultation obligations. The ET had to determine whether this duty had been triggered on the 2 May 2023.
The ET found that the collective consultation obligations were breached in respect of the employees dismissed on 5 May 2023. However, it dismissed the claims of the three employees dismissed on 2 May 2023. The ET concluded that, at that point, there was no proposal to dismiss 20 or more employees. It placed weight on the fact that on the 2 May the administrators were still pursuing a possible sale of the business as a going concern and that only 15 employees were dismissed on that date. In the ET’s view, the proposal to dismiss the wider workforce only arose once the sale process failed a few days later. The three employees dismissed on 2 May appealed.
The EAT allowed the appeal in full. It held that the ET had applied an unduly narrow approach.
The EAT determined that the wording “proposing to dismiss” involves ongoing consideration of future events, even if those events are uncertain or provisional.
The EAT criticised the ET for focusing too heavily on the dismissals on individual days and for treating the going‑concern sale strategy as effectively postponing the consultation duty. A proposal can be “clear, albeit provisional”.
On the evidence, the EAT found that by 2 May 2023, there was, at the very least, a provisional intention that the business would close if no sale was secured. That meant large‑scale redundancies were being proposed, even if not yet finalised. The EAT substituted its own decision and held that the three employees dismissed on 2 May 2023 were also entitled to protective awards.
When assessing collective consultation obligations, employers must consider the number of employees they are proposing to dismiss over a 90‑day window, not just how many people are dismissed on a particular day. Provisional plans can trigger consultation: a plan does not need to be final or certain. A clear but provisional intention - for example, closure unless a rescue succeeds – may be enough.
Given the increase in April 2026 to the maximum protective award available for a breach of the collective consultation requirements from 90 days’ to 180 days’ pay, employers need to be very careful to ensure they collectively consult when required.
In addition, employers should be aware that in 2027 there will be a further change to collective consultation obligations. Under the Employment Rights Act 2025 (ERA 2025), the Government will introduce an organisation-wide threshold for triggering collective redundancy consultation obligations. It will mean that an employer will be required to undertake collective redundancy consultation when it proposes to make redundancies which meet or exceed that threshold number across their entire organisation (rather than at just one establishment) over a 90-day period. A Government consultation on what the threshold should be has recently closed and the Government’s response is awaited. The organisation-wide threshold will apply in addition to the current threshold of 20 proposed dismissals at one establishment.
