A total of 24 former staff members at a collapsed costs firm have the right to three months’ pay, an employment tribunal has ruled. The claimants, made redundant by Just Costs Solicitors earlier this year, had taken their case to the employment tribunal arguing the process had been handled unlawfully.
The firm went into administration in January with 26 staff told they were redundant. The announcement came 18 months after Just Costs Solicitors bought Just Costs Limited out of administration.
Employment Judge Franey, sitting in Manchester last month, ruled that the successor firm failed to comply with the requirement of section 188 of the 1992 Trade Union and Labour Relations (Consolidation) Act to consult appropriate representatives of the employees about the dismissal.
The firm was ordered to pay each claimant remuneration for the protected period of 90 days from the moment the dismissals took effect. No further details were given in the judgment.
It is likely the outstanding payments will be funded by the taxpayer. The Secretary of State for Business, Energy and Industrial Strategy was named as a second respondent in the case, and the former employees can now claim against the government under what is known as a protective award, which is granted where a business is insolvent and cannot pay compensation.
The ruling is the latest chapter in a long-running saga concerning the collapse and ultimate breaking up of the costs firm based in London and the north-west.
Just Costs Solicitors was created in 2017 through a pre-pack administration after its predecessor folded owing £800,000. But the new business failed to turn the company’s fortunes around, and at the time administrators were appointed in January it had outstanding debts of around £1.6m.
The position regarding Just Costs Limited was confirmed last month in an administrator’s report compiled by Manchester-based Begbies Traynor. The report stated that one secured creditor (NatWest) will suffer a ‘significant’ shortfall, while unsecured creditors are unlikely to receive any dividend.
It has previously been reported that the new company owed its predecessor £740,000 when the second administration was entered into. The Gazette understands that £316,000 remained outstanding to Just Costs Limited eight months later.
Just Costs Solicitors was split up in January and sold to six panel firms, with between 70% and 85% of the work in progress value expected to be realised.
The firm had experienced difficulties as a result of regulatory and financial pressures currently being placed on the sector, and had also suffered from cashflow issues. Administrators said at the time that while the number of redundancies was ‘unavoidable’, around 1,000 client matters were seamlessly transferred to regulated practices and therefore the firm avoided SRA intervention.
The last administrator’s report for this company, filed in August, did not place an estimate on how much preferential and non-preferential creditors could expect to receive.
