The sudden closure of Scotland’s M&Ds theme park will come as a horrendous shock to employees.
Of course, there is never a good time to lose your job but during the unprecedented times that we all face because of the pandemic crisis, the loss of a job can be devastating.
The Government’s job retention scheme was set up to ensure that no staff were made redundant during the coronavirus crisis.
Under the scheme, employers who were struggling to pay staff could “furlough” employees by putting them on a temporary leave of absence, with the Government guaranteeing to pay 80 per cent of the employee’s salary, up to £2,500 per month.
So how can this have happened and why didn’t M&Ds bosses just chose to furlough their staff?
Why was M&Ds theme park shut down?
News reports suggest that the amusement park had been struggling financially for years. The park’s closure is unlikely to have come as a result of the lockdown and it is likely that the business’ demise would have been on the cards for some time.
M&Ds were unable to pay staff the wages that they were due for April and it is likely that mounting debts are the reasons for the closure.
Legally, employers are not allowed to sit back in the knowledge that their business is crumbling and hide it from their staff. Thomas Cook might have avoided collapse, or minimised the impact of the business closure, if they had consulted with staff about the financial issues that they were facing.
Priya Cunningham, our employment law specialist, says: “The law is clear that employers in situations like this employers have a duty to consult with staff on ways to avoid dismissing staff or look at ways to minimise the impact of the dismissals.
“Staff on ground level are sometimes the best placed to speak about working practices and what could be done better to avoid the company collapsing and, ultimately, save themselves from being out of a job.
“If the directors at M&Ds were upfront about the state of their finances it would have given staff the opportunity to consider whether they wanted to look for alternative employment and ultimately avoid the risk of unemployment.
“They would have known for quite some time that their financial problems were significant, but still hid the issue from staff.”
Priya suggests one of the reasons that directors might not be honest with their staff about what is going on it because they don’t want to impact on their business further. There may be fears that staff will leave, leaving the business in an even bigger mess. Regardless of the reason, failure to consult with staff is unlawful and could lead to criminal proceeding against the directors in some rare cases.
Compensation for employees being made redundant
The good news for employees is that they are entitled to compensation for the failure to consult. Employees who lose their job in circumstances like the closure of Thomas Cook are entitled to 8 weeks pay for the failure to consult. This compensation payment is known as a protective award. This is in addition to other payments that they are entitled to, including statutory redundancy pay, outstanding holiday pay, outstanding wages and notice pay. As the company has gone into Insolvency the payment of all outstanding sums will be made to employees through the Government’s Insolvency Service.
Although it defies logic that directors can run a business into the ground and then have the tax payer pick up the bill, employees should ensure that they claim for all the sums that they are entitled to.
At Watermans we can pursue a claim for protective award and guide you through the process of seeking any other payments that you are entitled to.