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The London Employment Appeal Tribunal (EAT), in a decision given on 20 December 2006 in the case Cranswick Country Foods v Beall and Others, has confirmed that remuneration paid to employees under a protective award cannot be reduced by earnings paid to them during their period of redundancy notice.
During 2005, two employment tribunals ruled that the employer, Cranswick, had failed to consult about the redundancies of 90 employees and they were awarded a protective award of 70 days' pay. The statutory provisions governing protective awards is set out in the Trade Union and Labour Relations (Consolidation) Act 1992. The employer argued that section 190(4) of the Act, which says that there is no entitlement to a protective award payment unless the employee would be contractually entitled to be paid by the employer for the period if it fell within the notice period, means that such payments should be reduced by earnings paid during the notice period.
The EAT noted that, in 1993, after an adverse decision by the European Court of Justice (ECJ), the UK removed from section 190 of the 1992 Act a provision which specifically allowed payments made during the notice period to be offset against protective award payments. The ECJ had ruled that, in allowing the offset, a protective award loses its deterrent value. It was clear, therefore, that the wording of section 190(4) could not be read to mean the same as the provision that had been removed.
As a result, where a protective award is awarded by a tribunal, the payments due must be paid in full to the employees covered by the award whose employment is terminated without notice or who work some or all of their notice before leaving. However, the EAT made it clear that no payments under a protective award can be paid to employees who are given notice but, in the event, continue in the employment.
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Further information:
Cranswick Country Foods plc v Ms. S Beall and Others
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