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03
Nov
Tribunal report lays bare Farmison’s dispute with founder
An employment tribunal judgment has described the circumstances surrounding Farmison’s administration last year and the dispute with its founder.
The Ripon premium meat retailer, whose use of heritage breeds attracted clients including Harrods and Fortnum & Mason, fell into administration last year.
Former restaurateur John Pallagi, who founded Farmison in 2011, held talks with former Asda chief executive Andy Clarke and Chilli Marketing founder Gareth Whittle about forming a consortium to save it.
But Mr Pallagi was then excluded from the consortium and made redundant. When the consortium went on to buy the company, Mr Pallagi claimed unfair dismissal and a three-day employment tribunal was held in Leeds in August.
The tribunal’s two-page judgment ordered Farmison to pay Mr Pallagi £115,352 for unfair dismissal for failing to comply with TUPE regulations, as reported by the Stray Ferret.
Employment judge Neil Maidment’s subsequent 21-page judgement has now described the saga in detail.
It is based on evidence given by Mr Pallagi, Mr Whittle, chief operating officer Michelle Kennedy and Arvinder Jit Singh, who was appointed as an administrator, and a bundle of 610 pages of pre-submitted documents.
The battle to save Farmison
The tribunal heard how private equity investor Inverleith LLP acquired Farmison from Mr Pallagi on February 24, 2022. It retained Mr Pallagi as chief executive on a service agreement which included an annual salary of £120,000, a 25% guaranteed bonus, a £12,000 per annum car allowance, family healthcare and life insurance.
A clause also protected him from dismissal by any potential new owner by saying he would be paid £100,000 if his employment was terminated in the event of an acquisition or merger.
The tribunal heard that Inverleith became “stretched financially” in late 2022 and appointed corporate finance advisers FRP in February 2023 to find a buyer for the business as a going concern.
At this point Mr Pallagi was introduced to to Mr Clarke, who had shown an interest in investing and the two men formed a consortium that also included Mr Whittle and Kieron and Christian Barton.
In March 2023 meat wholesaler Hixson and Eversfield Organic showed interest in acquiring the business. The latter wanted to relocate the company away from Ripon but Hixson’s higher offer was accepted. The Hixson sale, however, fell through on April 4 due to Mr Pallagi’s TUPE liabilities, according to the tribunal judgment.
On April 6, Farmison entered administration. Administrators FRP made Mr Pallagi and 75 other staff redundant and retained five employees. The judgment says:
There was no consultation with any employees prior to the administration and no advance notification of possible redundancies. Those made redundant were given a fact sheet and told how to claim for amounts owed through the redundancy payments service.
The consortium reformed and expressed an interest in the business, along with 10 others. Four wanted the intellectual property assets, three wanted the physical assets and four wanted a combination of the two.
Then on April 17, Mr Clarke told Mr Pallagi he was no longer part of the consortium team. “This came as a significant shock to the claimant,” the tribunal report says.
Gareth Whittle pictured at Farmison shortly after the sale of the company.
The consortium bought the company four days later. They used the same Farmison trading name but the business was now owned by Farmison & Co Limited, whereas it was previously owned by FL Meat Realisations Limited and the tribunal had to decide whether the new or old firm was liable for TUPE regulations.
The new owners re-employed “a substantial number of those dismissed by the administrators” on new terms and conditions, the report says.
In June, Andy Adcock was appointed the new chief executive on the same salary as Mr Pallagi had received.
The verdict
When the tribunal published its initial findings in favour of Mr Pallagi, Farmison said it was awaiting the full reasoning why the tribunal concluded it was liable for the payment as it had acquired the business from administration.
The full judgment, dated September 25, says the key issue was whether “the transfer was the sole or principal reason for dismissal”.
Referring to FL Meat Realisations Limited as the 'first respondent' and Farmison & Co Limited as the 'second respondent', it says:
On the balance of evidence, the tribunal does conclude that the principal reason for the claimant’s dismissal was a relevant transfer pursued to TUPE, the transfer of the first respondent’s business to the second respondent on 21 April 2023. In all of the circumstances, the claimant was indeed dismissed for reason of the relevant transfer, the transfer of the first respondent’s business to the second respondent. He was therefore unfairly dismissed.
Prior to his dismissal there had been no election of representatives for the purpose of providing information and potentially consulting with affected employees in relation to a relevant transfer.
The judgment adds that Mr Pallagi was on Jobseeker’s Allowance from May 26, 2023 and then on Employment and Support Allowance from January this year due to poor health. It says:
In conclusion, the claimant held a very senior position in a business he had founded and had worked in for more than 10 years. He was in his mid-50s at the point of his dismissal. This was a niche business combining specialist meat products with online selling. The claimant was shocked to lose his position in the circumstances which occurred and would have inevitably required a period to adjust and take stock.
Mr Pallagi received a basic award of £9,645 for statutory redundancy payment and a compensatory award of £105,707 — the maximum permitted.
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