Although the Shearings brand was later acquired by Leger Holidays, there were an estimated 2,500 job losses when Shearings’ former parent firm Specialist Leisure Group collapsed in May 2020.

Some 937 former Shearings staff instructed employment law firm Simpson Millar to pursue legal action over claims they had not been consulted correctly over the redundancy process. The case is not connected with Leger’s subsequent purchase of the Shearings brand.

A judge at an employment tribunal has now backed this claim and ruled Shearings failed to carry out a proper consultation with staff at risk of redundancies.

These employees are now in line to receive a share of an estimated £4 million payout as compensation for this lack of consultation.

Damian Kelly, head of employment at Simpson Millar, said: “As a result of the employment tribunal judgments, our clients will now be compensated by up to 90 days’ gross pay, albeit capped at £4,304 given that the company is insolvent.

“While many people assume that little can be done when a business goes into insolvency, that is not the case. Employers still have a duty under UK employment law legislation to carry out a proper consultation with staff at risk of redundancies.  

“When that law is disregarded, it can lead to an extremely difficult and distressing time for those affected – many of whom are left struggling financially, while also looking to secure a new role with little, if any, notice.”

The money will be paid through the government’s Redundancy Payments Service (RPS), which pays employees up to eight weeks’ wages through a “protective award” where an employer has become insolvent and is found not to have properly consulted staff on redundancies.

RPS also makes other forms of payments to employees of insolvent companies, such as redundancy, holiday and notice pay.