Long-serving directors win redundancy pay but unfair dismissal claims fail
Two operations directors with 20 years' service were awarded redundancy pay and notice pay after their employer went into winding-up, but their unfair dismissal claims were rejected.
1 min read · Last updated 18 May 2026
Case details
- #continuous-employment
- #associated-employers
- #redundancy-payment
- #notice-pay
- #small-employer
- #winding-up
Key facts
- The claimants were employed by the fifth respondent, Data Labs Global Ltd, and dismissed on 16 November 2021.
- The respondents were a group of associated companies being wound up due to financial difficulties.
- The claimants had been continuously employed since 2001, as the companies were associated employers.
- The claimants were paid £2,500 gross per month and received £5,000 on termination.
- The claimants were consulted about redundancy but no alternative roles were available.
- The claimants were entitled to 12 weeks' statutory notice.
Timeline
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Business established
The group of companies was first established. The first claimant was involved from the start.
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Second claimant started employment
The second claimant began employment, receiving his first pay at the end of June 2001.
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Demerger of Pension Tax Refund Ltd
A demerger transferred part of the business to the second respondent, but the claimants continued to be paid by Pension Tax Refund Ltd after this date.
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Mr Blackburn became majority owner
Mr Blackburn became the majority owner of the respondents. The claimants were furloughed on the same date.
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Letter offering resignation
Mr Blackburn offered the first claimant the option to resign as director before being removed.
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First claimant removed as director
Mr Blackburn removed the first claimant from his director roles.
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Redundancy warning letter
Mr Blackburn gave the claimants a letter stating they were at risk of redundancy due to financial difficulties.
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Mr Blackburn's letter on demerger effect
Mr Blackburn wrote that the 2013 demerger severed the claimants' employment with Pension Tax Refund Ltd.
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First redundancy meeting
The first claimant met Mr Blackburn to discuss the proposed redundancy.
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Dismissal by reason of redundancy
Mr Blackburn gave the first claimant a notice of redundancy, terminating employment. The second claimant was also dismissed on this date.
The legal issue
The tribunal had to decide whether the claimants were unfairly dismissed by reason of redundancy, and whether they were entitled to redundancy payments, payment in lieu of notice, and holiday pay.
The outcome
The tribunal dismissed the unfair dismissal claims because the employer had a genuine redundancy situation due to financial difficulties, consulted the claimants, and had no alternative roles. However, the employer failed to make statutory redundancy payments and pay in lieu of notice, so those claims succeeded.
- First claimant: £9,711.46 redundancy pay + £7,500 notice pay = £17,211.46
- Second claimant: £10,865.30 redundancy pay + £7,500 notice pay = £18,365.30
- Holiday pay claims were rejected as the claimants had already taken their holiday entitlement.
Lessons & takeaways
- Even in a genuine redundancy, employers must make statutory redundancy payments and pay in lieu of notice unless the employee is excluded (e.g., by contractual terms).
- Long service does not automatically make a redundancy dismissal unfair if the employer follows a fair process and has a genuine business need.
- If a company is being wound up, employees should still pursue their statutory entitlements through the tribunal or the Insolvency Service.
- Claimants who represent themselves can succeed on straightforward claims like redundancy pay, but complex unfair dismissal claims may require legal advice.
When redundancy is genuine but the process still matters
Two operations directors with 20 years' service were dismissed when their employer, Data Labs Global Ltd, ran into financial difficulties and began winding up. The tribunal found that the dismissals were genuinely due to redundancy and that the employer had acted reasonably: it consulted the claimants, warned them of the risk, and had no alternative roles to offer. The unfair dismissal claims therefore failed.
However, the employer had not paid the claimants their statutory redundancy pay or payment in lieu of notice. The tribunal awarded these sums: over £9,700 to the first claimant and nearly £10,900 to the second, plus £7,500 each for notice pay. The holiday pay claims were rejected because the claimants had already taken their holiday.
What the employer could have done differently
The employer's mistake was not paying the statutory entitlements. Even in a genuine redundancy with a fair process, the law requires employers to make redundancy payments and pay in lieu of notice unless there is a contractual exclusion. Here, the employer simply did not pay, leaving the claimants to bring tribunal claims to recover what they were owed.
Why this case matters
This case shows that a fair redundancy process can protect an employer from an unfair dismissal claim, but it does not excuse non-payment of statutory entitlements. For employees, it is a reminder that even if you lose an unfair dismissal claim, you may still be entitled to redundancy pay and notice pay if the employer fails to pay them. The case also highlights that long-serving employees are not automatically protected from redundancy if the business is genuinely struggling.
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