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8:31 am, November 10, 2009
Ex-managers at home shopping firm win £190,000 damages

Managers who lost their jobs after a home shopping company collapsed have won £190,000 in damages from the buyers of the firm.

The case involved four managers, including the chief executive, of Health & Home Shopping Ltd which went into administration in October 2007 after business was hit by a series of postal strikes.

The assets of the Salford-based company were sold by administrators from the Manchester office of Deloitte to Express Gifts Ltd, part of Yorkshire-based home shopping group Findel Plc (LSE: FDL), which relocated the business to its warehouse in Accrington.

A pre-hearing in January found that all Health & Home Shopping staff, together with all employment liabilities, had transferred to Express Gifts Limited under TUPE. This included the four individuals and more than 60 co-claimants.

Manchester law firm Berg Legal, which represented the managers, said two of the claimants had been successful in their claims for unfair dismissal against Express Gifts, with all four securing awards for breach of contract.

The firm said the employment tribunal did not accept inconsistent reasons for dismissal prior to transfer to Express Gifts given by administrators from the Manchester office of Deloitte. Three of the four also received the maximum “protective award” of 13 weeks' pay as a result of the administrators' breach of the TUPE regulations.

Berg said the award was against both Express Gifts and the administrators, who would split the cost 50:50, but Deloitte said this was incorrect.

Bill Dawson, Deloitte's head of reorganisation services in the North West, said: "In most situations where a business sale is effected in administration, there is insufficient time to carry out consultation in line with the TUPE regulations.

"The administrators' actions in this case were consistent with usual best practice and achieved the best available result for creditors of the company.

"It should be noted that no awards were in fact made against the administrators, that the outcome of this case had no adverse impact on creditors, and that the administrators did not have conduct of, nor were they party to, the proceedings."

Berg said the case was unusual because the tribunal held that the dismissal of one of the claimants was connected with the transfer and thus was protected under TUPE, even though Express Gifts had not been identified as the purchaser at the time of dismissal three weeks prior to the sale. At that time, Express Gifts was only one of a large number of potential purchasers.

The tribunal also held that the administrators had a duty to inform “affected employees” about the proposed transfer to Express Gifts, even before any deal had been signed and a transfer date fixed.

Alison Loveday and Joseph Sutton of Berg Legal Solicitors and James Hurd of St James's Chambers in Manchester represented the claimants.

Sutton said: “This case confirms that, under TUPE, any dismissal connected with a transfer is likely to be automatically unfair, even where no clear purchaser has been identified.

“Employers should be very clear about the reasons for dismissing staff and purchasers should be aware of the risk that they may be responsible for dismissals that have taken place, even before any deal to buy the business has been concluded.”

He said TUPE was complex and companies should automatically seek legal advice when entering into transactions to ensure they understand the risks involved.

Alison Loveday, Berg's head of employment, said Express Gifts “got off lightly” because more of those who lost their jobs might have won compensation had they taken legal advice.

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