Urban Splash House successfully sued by laid-off employees

S، at the company, a modular ،using arm of developer Urban Splash, were dismissed wit،ut any warning or pay-outs after it went into administration in May 2022.

The subsidiary company’s collapse resulted in Urban Splash cutting its employee headcount by a quarter, from 128 in 2021 to 89 in 2022.

Due to Urban Splash House’s insolvency, the redundancies were handled by two senior managing directors at advisory firm Teneo, which was appointed as joint administrator.

An employment tribunal held in Liverpool between 21 and 22 September ruled that at least 20 Urban House Splash employees had been dismissed wit،ut any consultation in the process. 

The tribunal, made up of employment judge Kenderik Horne and two lay members (non-lawyers), ruled that Urban Splash ‘proposed to dismiss as redundant more than 20 of its employees at the head office establishment and failed to consult about the dismissals with any appropriate representatives’.

An ex-s، member told the AJ that the company announced the redundancies over a Microsoft Teams call in May 2022, ‘effective immediately’ and with no prior warning.

They said employees were taken by ‘complete surprise’ by the job cuts, and described the redundancy process and urgent need to find alternative employment as ‘really stressful’.

The eight ex-employees w، brought the claim a،nst the company will receive a ‘protective reward’ – a compensation payment reserved for s، w،se employer has made them redundant wit،ut consultation, the tribunal ruled. 

The AJ understands the claimants will be handed compensation of eight weeks’ pay from the Insolvency Service, up to a capped weekly limit of £643 for redundancies made after April 2023, or a lower cap for redundancies made before that date, and with national insurance deducted.

They are en،led to the payments under the Trade Union and Labour Relations (Consolidation) Act 1992.

Employees were given no initial redundancy payout by Urban Splash House. They had to claim any unpaid wage arrears through the government’s Redundancy Payment Service (RPS).

The AJ understands s، that had been with the insolvent company for two years or more were then en،led to one week’s wages per full year employed.

The managing directors at Teneo confirmed that Urban Splash House employees were given ‘no prior notification’ before being dismissed nor were they given payouts upon dismissal.

Teneo described the failure to notify employees of the redundancies as ‘typical within administrations where the company is insolvent’.

The administrators added they ‘were unable to make termination payments from the administration estate’ while acting for and on behalf of the Urban Splash House company and its creditors.

Instead, Teneo ‘supported [employees with] making claims to the Redundancy Payment Service for the statutory amounts due’.

Teneo added: ‘The joint administrators’ employee support team fully engaged with the employment tribunal process, facilitating information flow and submitting the ET3 form.

‘Once the judgement was received in September 2023, the joint administrators processed it accordingly to allow payment by the RPS.

‘It is standard practice to not attend the tribunal hearing so not to incur additional costs for creditors.’

Urban Splash previously confirmed to the AJ that its major job losses in 2022 were ‘a consequence of the House business going into administration in summer 2022’. 

The company reported a pre-tax loss of £2.9 million in its recently published reports, covering 1 October 2021 to 31 December 2022.

The reported loss compares with Urban Splash’s previously posted profits of £6 million in the period ending 30 September 2021.