What can employers learn from Wilko’s mistakes in the redundancy process?

An Employment Tribunal has ruled that almost 10,000 former Wilko employees will receive a £2 million payout due to the high-street retailer’s failure to consult staff before the redundancy process after it went into administration in 2023.

About 9,000 former staff who worked in a store with 20 or more people will get four days’ pay, while roughly 1,100 employees who worked in a distribution centre or support centre role will get 13 days’ pay, according to the union.

The Employment Tribunal findings

The Employment Tribunal found that Wilko breached its legal obligations by failing to carry out timely and meaningful collective consultation before making mass redundancies in 2023. The statutory consultation period depends on the number of redundancies proposed at a single establishment: 30 days for 20 to 99 redundancies, and 45 days for 100 or more. Wilko did not meet the minimum consultation periods before dismissals began. Although consultation eventually took place, it was too late to comply with the law. The judge described this as a “technical breach” but made clear that insolvency does not excuse failure to consult properly. The protective award compensation reflects the seriousness of this failure to engage employees adequately, even in an administration context.

Entering administration or insolvency does not provide a free pass to employers to ignore their statutory consultation duties which remain binding regardless of financial distress.

What are the legal requirements around collective consultation?

Employers proposing 20 or more redundancies at one establishment within 90 days must begin collective consultation with recognised trade unions or elected employee representatives. Employers must also notify the Secretary of State of redundancies using the official HR1 form via the electronic notification system managed by the Department for Business and Trade.

The Wilko ruling makes it clear that these obligations remain fully in force during insolvency proceedings, and failure to meet them can result in significant protective awards against the employer. Entering administration or insolvency does not provide a free pass to employers to ignore their statutory consultation duties which remain binding regardless of financial distress.

How can HR teams avoid similar issues during restructuring or administration?

HR teams should be involved early when redundancies are anticipated, ensuring consultation triggers are identified promptly. They need to work closely with legal advisors and insolvency practitioners to schedule consultation within the statutory timeframes. HR should support the engagement of recognised unions or, where none exist, facilitate employee representative elections. Thorough record-keeping of consultation meetings, proposals, and employee feedback is essential. Transparent communication throughout the process helps protect employees’ rights and reduces the risk of costly tribunal claims.

If you have questions or concerns about redundancies, please contact employment lawyer Marie van der Zyl.