The Ramifications of Thomas Cook’s Collapse

On 23 September 2019, Thomas Cook went into compulsory liquidation.

Around 21,000 worldwide employees were left without jobs, including 9,000 UK staff.

Thomas Cook Collapse

What’s happened since?

Since then, former employees have begun joint legal action. They claim the company didn’t follow appropriate consultation procedures for redundancy in the run-up to its collapse.

Additionally, a competitor travel company, Hays Travel, has offered interview priority to those who lost their jobs. And, the company has bought several of Thomas Cook’s previous stores.

The sudden collapse of a large company such as Thomas Cook, and the knock-on effect of this, can have far-reaching legal implications. Employees have rights, regardless of whether their roles are to be made redundant. It doesn’t matter if the redundancy is a result of the business closure or if company ownership is transferring.

Mass redundancies

Typically, organisations who’re planning to make 100 or more employees redundant are required to take part in a collective consultation. This lasts at least 45 days before any dismissal takes place.

The purpose of a collective redundancy consultation period is to ensure a fair process. This allows affected employees to be informed of the reasons behind the redundancy. It also gives them the opportunity to suggest any alternative courses of action. Alternatives such as laying off employees or allowing for job sharing options.

However, it would appear that Thomas Cook’s sudden closure didn’t allow for this consultation to occur and staff are now bringing claims for failure to carry this out.

What happens if they win?

If successful, the claimants in this case would be entitled to a protective award, consisting of up to 90 days’ pay.

However, this claim may face issues as it proceeds to the tribunal.

Previously, the European Court of Justice has held that, when determining whether collective consultation requirements are triggered, the ‘establishment’ in which the employees carry out their duties must be taken into account.

In this case, the question will be if an ‘establishment’ represents the company as a whole, or each individual store.

If it’s the latter, it’s very unlikely that individual stores contained enough employees to warrant compulsory consultation for redundancy.

Hays Travel

Hayes Travel has announced that it will provide employment opportunities to former Thomas Cook employees. This situation doesn’t amount to a transfer of undertakings under the law (TUPE).

When a TUPE transfer occurs, the continuity and terms & conditions of employment of the former company’s employees transfers over with the business. This provides staff with legal protection from losing their jobs. However, this isn’t a TUPE transfer.

Here, Thomas Cook’s ownership has not transferred to Hays Travel. Instead, their former competitor has bought many of the former Thomas Cook stores.

Therefore, any employment that’s entered into with Hays Travel by former Thomas Cook employees will not have continuity; it will represent a new contract of employment.

Expert support

The situation with Thomas Cook is rare, but that doesn’t mean you should become complacent. If your business is facing closure, you must be prepared to respond appropriately.

If you’re facing a redundancy scenario and are unsure how to respond. Speak to one of our HR consultants on 01455 858 132.