What should former Thomas Cook employees do next?
On Monday 23 September the news that all the employees and holiday makers of Thomas Cook were dreading broke: Thomas Cook would cease trading with immediate effect. The aftermath of this decision has led to chaos for holiday makers either about to go on holiday or currently abroad with the company.
The collapse of Thomas Cook has also meant that approximately 9,000 UK based employees face an uncertain time and financial future. This leads to the question – what will happen to the employees and how will they obtain what they are owed from Thomas Cook as it enters liquidation?
Generally, redundant employees are entitled to accrued holiday pay and their earned wages and if they have been employed for over 1 month they will also be entitled to statutory notice. If they have been employed for over 24 months then they will also be entitled to redundancy pay. Redundancy pay is calculated as 1 week’s gross pay (capped at £525 per week) for each complete year of service up to a limit of 20 years.
The employees may also be entitled to a compensation if Thomas Cook did not sufficiently consult with them collectively.
Section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) states that an employer is obliged to collectively consult if it is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. The consultation should begin in good time before the redundancies take effect.
The maximum sanction for a failure to collectively consult is 90 days’ gross pay for each affected employee, referred to as a “protected award”. The fact that Thomas Cook has ceased trading with immediate effect does not mean that collective consultation was not require or is not relevant. Previous high profile collapses, such as Comet in 2012, saw employees receive the protected award in what appeared to be similar circumstances to Thomas Cook’s collapse.
Logically it may seem futile to attempt to obtain payment from an insolvent employer so where an employer is insolvent employees can apply for payment from the National Insurance Fund (a government fund) for the following:
- Redundancy pay.
- Accrued but unpaid holiday pay.
- Notice pay.
- Up to 8 weeks pay (capped at £525 per week). Any protected award made due to the failure to collectively consult can be paid out of this part of the National Insurance Fund.
The protected award can only be claimed from the National Insurance Fund following a judgment from the Employment Tribunal that there was a failure to collectively consult. Former employees of Thomas Cook should be aware that they must commence a claim to the Employment Tribunal within three months less one day of the end of their employment. They should also note that before they are able to issue a claim with the Employment Tribunal they must take part in Early Conciliation with ACAS. As such, time is of the essence should former Thomas Cook employees want to seek the protected award.
GA Solicitors has a dedicated and specialist employment solicitors team who would be happy to speak to any former employees of Thomas Cook about their redundancy and what their options are. To contact head of team and partner Rob Zacal, call 01752 203500 or email Rob.Zacal@GAsolicitors.com.
Rob Zacal, partner and employment solicitor