Time Out or In?

Employees’ claims against companies in administration should be accepted but put on hold pending consent from administrators, an Employment Appeal Tribunal has ruled.

Former employees of Sayers Confectioners, part of the Lyndale Food Group, which went into administration in June last year, won their case because the Tribunal should not have declared their claim as out of time.

Without the necessary consultation, the company announced that more than 30 employees were to be made redundant with immediate effect. The employees raised a claim for statutory redundancy payment and other contractual entitlements. The Employment Tribunal rejected these claims on the grounds that, under the Insolvency Act 1986, claims against companies in administration cannot be made without the administrators’ prior consent. The employees said they had applied for consent within the time limits and it was the administrators who had not responded on time.

Referring to Carr v. British International Helicopters Ltd, Judge Underhill, presiding at the Employment Appeal Tribunal said such claims should be held until the administrators reached a decision.

“I can see no reason why the decision in Carr does not apply equally in these cases,” the judge said. “I am told that the normal practice is to accept such claims but stay them pending a decision by the administrators whether to give consent.”

Carol Devereux, Regional Officer for Unite, said: “The time limit was due to expire and, in effect, the employees could not bring their claims on a technicality. I am delighted at the common sense approach to these cases, especially as the number of claims against companies in administration is only likely to increase in the near future.”