If My Employer Is Now Insolvent Is A Fair Trial Still Possible?

If your employer is in financial difficulties and you are thinking about pursuing an Employment Tribunal claim think again. The main way that the litigation process can offer redress is through financial compensation and if your employer is insolvent or heading in that direction you could be wasting a lot of time and energy for no good reason. 

One thing to consider in such a situation is that if your claim concerns whistleblowing, discrimination or harassment you might want to list personally, as a defendant in the claim, one or more of the owner-manager-directors of the company so that you have someone to sue if the company goes bust. Note also that you will have to complete Acas early conciliation for that person as well as the company. 

In Boateng v Moss Bros Group Ltd the Employment Appeal Tribunal (EAT) held that a fair trial was no longer possible to hear some of the claimant’s claims. 

Mr Boateng worked as a sales adviser for Moss Bros in the Strand branch but later transferred to the Stratford branch. He was later promoted to the role of Hire Manager. In March 2019 an incident occurred which involved Mr Boateng and a number of colleagues. He was dismissed due to his alleged conduct on 28 October 2019. An internal appeal against dismissal failed. 

Mr Boateng brought a claim in February 2020 which included Equality Act claims around race and religion as well as claims for unfair dismissal and unpaid holiday pay. The Equality Act claims were struck out at a preliminary hearing in 2023 on the basis that a fair trial was no longer possible. Mr Boateng appealed this decision. Mr Boateng’s unfair dismissal and holiday pay claims were able to proceed because the investigation and dismissing officers for the respondent were available to give evidence. Those claims were heard and dismissed on the evidence in 2024. 

The EAT held that a substantial delay in the progress of the claims, caused by the employer entering into a Company Voluntary Arrangement (CVA) and contributed to by the Covid-19 pandemic, which meant that many of the individuals identified in the claims no longer worked for Moss Bros and were either uncontactable or unwilling to cooperate, made a fair trial impossible. 22 of 27 witnesses could or would not participate. 

The tribunal was entitled to conclude that in a case involving a large number of alleged incidents and given that only a handful of protagonists were available to give evidence, the employer would be at an unfair disadvantage because key witnesses were not available. The EAT agreed. 

The EAT noted that the issue of whether a fair trial is still possible may arise where neither party is to blame for the circumstances. The passage of time is one such reason. More usually the tribunal will have to assess the risk to the tribunal’s ability to conduct a fair trial against the material prejudice to the parties. The risk must be sufficiently serious or high to justify a strike-out. Consideration must be given to steps that could and should be taken to address or mitigate those risks and therefore enable a fair trial to proceed. The matter is highly fact sensitive. 

In this case the EAT considered the extent to which documentary evidence might assist. The tribunal was entitled to have regard to the overall picture which emerged which was that only a very small number of witnesses were available and the substantial time lapse had contributed to its conclusion that a fair trial on the Equality Act claims was no longer possible.