The Employment Appeal Tribunal (“EAT”) has delivered an important decision for insolvency practitioners on the point at which redundancy collective consultation obligations arise following the appointment of administrators.
In Ellard & others v Alliance Transport Technologies Ltd (in administration) [2025] EAT 169, the EAT confirmed that the duty under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) may be triggered at a very early stage of administration, even where redundancies are not yet inevitable and alternative rescue options remain under consideration.
Background: redundancies immediately following administration
Alliance Transport Technologies Ltd (“ATT”) employed approximately 51 employees. As financial pressures mounted in early 2023, the company explored further investment and potential rescue options. Notices of intention to appoint administrators were filed and, on 2 May 2023, the company entered administration.
On the day of appointment, 15 employees (including the three claimants) were dismissed as redundant. A further wave of dismissals followed on 5 May 2023 once it became clear that a sale of the business as a going concern would not proceed. At that point, all but six employees were dismissed and the business was wound up.
Claims were brought for protective awards on the basis that there had been a failure to comply with collective consultation obligations.
Employment Tribunal decision
At first instance, the Employment Tribunal distinguished between the two sets of dismissals.
Employees dismissed on 5 May 2023 were awarded protective awards, as more than 20 redundancies were clearly proposed by that point. However, those dismissed on 2 May 2023 were denied protective awards, on the basis that only 15 redundancies were proposed on that date and that the administrators intended, at least initially, to pursue a going‑concern sale of the business and certain assets of the company.
The appeal
The dismissed employees appealed, arguing that the Tribunal had asked the wrong question.
They contended that the correct test under section 188 TULRCA was whether the employer was “proposing to dismiss” 20 or more employees within a 90‑day period, not how many redundancies actually occurred on the day of appointment.
The appeal decision
The EAT allowed the appeal in full.
Her Honour Judge Tucker held that the statutory wording requires a forward-looking assessment. The key question is whether, at the relevant time, the employer was proposing dismissals within a 90-day window, even if the proposal was contingent or provisional.
Importantly for insolvency practitioners, the EAT confirmed that:
- The duty to consult can arise even where administrators are still exploring rescue or sale options.
- A proposal to dismiss may exist where closure is the intended outcome unless a sale can be achieved.
- The question is one of commercial reality, not the intended end goal or aspiration.
On the evidence, the administrators’ own reports showed that, by 2 May 2023, there was a “fixed, clear, albeit provisional” intention to close the business if a sale did not materialise and that this was sufficient to trigger the collective consultation duty.
The EAT substituted a finding that the appellants dismissed on 2 May 2023 were entitled to protective awards of 90 days’ pay.
Practical implications
This decision carries significant implications for office holders, including:
- Early risk assessment is critical – collective consultation obligations may arise immediately on appointment if large scale redundancies are a realistic outcome
- Staged redundancies do not avoid liability – separating dismissals into phases will not prevent the duty arising if a realistic outcome is likely to be 20 or more dismissals
- Contingency planning is not a shield – the continued pursuit of a going‑concern sale does not, in itself, delay the obligation to consult.
What this means for you
Ellard v Alliance Transport Technologies Ltd is a clear reminder that, in an insolvency context, collective consultation is triggered by intention and likelihood, not certainty.
Administrators must look beyond the immediate steps being taken on appointment and consider the realistic end‑point of the administration.
Where closure and mass redundancies are a probable outcome (even provisionally) collective consultation should be treated as live from the outset.
This information is for guidance purposes only and does not constitute legal advice. We recommend you seek legal advice before acting on any information given.
