The sudden closure of the News of the World has led to a great deal of employment law comment about the litigation that News International is likely to face. From unfair dismissal claims, through the collective consultation provisions, culminating in a learned analysis of ‘stigma’ damages that may be recoverable by journalists whose professional reputation has been damaged by the ‘goings on’ at the News of the World.
It strikes me that the online employment law community cares rather more about the employment law implications of the News of the Word closure than News International does. I don’t want to pick apart all of the online analysis. Most of it is straightforward; some of it I disagree with – but these are complicated areas of the law and it would be possible to write quite an extensive essay on each aspect of the closure and still not cover all of the possible legal angles.
For me, the significant point is that if you are a certain kind of business then the mere technicalities of employment law do not stop you from doing what you want to do. NI did not have to get permission to close the News of the World – and the fact that they are almost certainly in breach of their S.188 collective consultation requirements did not enable the NUJ, the News International Staff Association or any of the staff themselves to prevent the closure. Essentially, breaching employment law leads to an additional financial cost for the employer – but does not prevent the employer from doing what it feels needs to be done.
And what is that financial cost? There are some 200 employees who have been given notice (just a rough figure, there may be more, and I am assuming that none of those 200 are freelancers). If we assume that 200 staff will go – what is a breach of employment law going to cost? (warning; complete guesswork follows)
Let’s assume everyone gets a maximum unfair dismissal award of £68K and a statutory redundancy payment of £5k. Add to that 200 protective awards of 90 days’ pay for each of the 200 journalists. I’m going to assume an average salary of £70,000 which pus the protective award at something like £17,000 per employee.
That gives us total compensation per employee of £90,000. Multiply that by 200 and you get £18,000,000.
That is the absolute top end of what the breach of employment law (plus statutory payments) can cost. In reality there will be fewer than 200 staff actually dismissed because some will find jobs elsewhere in News International. Not every journalist will expect to be out of work long enough to notch up the full compensatory award, but even those who do will not get that much because of the ‘Polkey deduction’. NI would argue that even if they had consulted, the paper would still have closed and the redundancies would still have happened.
Journalists are likely to accept compromise agreements for considerably less than the full amount. Better to get a certain payout now rather than an uncertain payout after an exhausting legal battle. Besides most of them would rather get on with their career than spend their time fighting for compensation in the Employment Tribunal.
So the total bill will actually be much less than £18,000,000. Half that maybe?
£9,000,000 still strikes me as a lot of money. But the total turnover of the Murdoch Empire is just over $32 billion.
The point is that if closing the News of the World suddenly and in a hurry is something that is seen as strategically important for the empire as a whole, then the overall cost of doing so is not that great.
For those of us in employment law, that’s a bit frustrating. We’d like to think that our expertise would be crucial to any employer looking to make such large scale redundancies. But the fact is that when the financial stakes are this high, employment law hardly features on the list of things that senior executives are worried about.
I’m sure that lots of people will enjoy reading all of the articles about employment law and the News of the World closure – and the situation is a good way of illustrating the principles that normal employers would be keen to abide by.
When push comes to shove, however, News International has bigger things to worry about.
Darren Newman
