WHIZZ COMPUTERS LTD (Whizz) is an established family company. It has been importing, up-grading, repairing and selling computers in the Tech Town area for over 15 years. It is currently based on 3
sites, with all business and associated activities, such as sales, repairs, deliveries and administration, taking place on all 3 sites. One site is located at the company’s head office at Unit
5,Techno Park Estate, Tech Town, and this is the largest of Whizz’s outlets. There is another office and workshop located in Carlton, a small town about 25 miles from Tech Town. The third, and
smallest, shop and office premises is located in Endmoor, a medium size town located approximately 60 miles from Tech Town and 75 miles from Carlton. The company employs a total of 180 staff across
its 3 sites.
Business has been very difficult for Whizz in the current economic climate. The Managing Director, Bill Brown, has received a very gloomy financial report from the company’s chief accountant
(attached at Document 1). At Mr Brown’s request, a breakdown of the demographic details and work history of all the employees has been produced by the Human Resources department (attached at
Document 2).
Whizz engages its staff on standard terms and conditions of employment. These terms are set out in the section 1 Employment Rights Act 1996 statement issued to all its employees. An example of this
statement is attached at Document 3. Although the sample provided is a statement for one of the sales executives, the statements issued to all employees are on similar terms, with appropriate
amendments to reflect the job title, salary etc. Contracts issued to the Senior Management Team are on similar terms also, with suitable amendments for job title and salary, but senior mangers’
contracts also contain a garden leave clause for a period of 6 months and a restrictive covenant preventing employees from working for a rival company, soliciting or dealing with former customers
of Whizz or poaching existing Whizz stafffor a period of 2 years after termination of employment and within a radius of 100 miles of the place in which they normally worked.
Mr Brown now faces various options in an attempt to keep the business going and he has approached you as the Company’s legal advisor to advise on the potential legal implications of each of the
options he is considering.
Your task is to advise Mr Brown on the actual or potential legal consequences of the options proposed by both the Accountant and the Human Resources Manager. Your advice should also contain an
outline draft of any documents that might be relevant to the advice you have given to Whizz Computers Ltd.
DOCUMENT 1
REPORT OF HERBERT ANCHOVY, Chief Accountant, Whizz Computers Ltd
To: Bill Brown, MD, Whizz Computers
The last 12 months has been a particularly difficult time financially for Whizz. Sales across all our customers, both regular commercial customers and smaller retailers whom we supply with the bulk
of their stock, are down as are direct sales to members of the public. Sales of our new range of ‘Mega Fast’ laptops have not been as high as was initially predicted and demand has fallen
generally for our whole range of products due to the availability of cheaper alternatives bought directly from abroad. All this would appear to be a sign of the general economic downturn across the
country, but steps need to be taken to ensure the company’s economic survival and maintain profits for our shareholders and to invest in the future.

I have looked through all the relevant figures, sales and costs data etc. We are pricing our products appropriately and at a level which the market will tolerate. However, any increase in costs is
likely to result in some of our customers seeking a cheaper alternative from elsewhere, creating a further reduction in sales. Increasing sales in the foreseeable future is unlikely. We will,
therefore, have to make savings on the costs’ side of the business. Our costs for raw materials are as low as we can get them. We have been able to arrange some excellent deals with our suppliers
and we are not in a position to reduce those further. This means, reluctantly, that the costs will have to come from our other main overheads, and that means a saving on staff salaries and wages.

On current figures, our most expensive operation in terms of staff costs to profits ratio is our site at Endmoor. In view of the amount of savings which have to be made, only a complete saving of
the total costs of operating the Endmoor site is likely to be beneficial for the rest of the group.
I would, therefore, make the following recommendations for your consideration:
1) Close down the operation at Endmoor altogether and immediately, sell off the land and physical assets and make the staff redundant. I should advise, however, that the expense involved in
making large redundancy payments is likely to cause even further financial difficulty for the company at this stage.
2) Close the Endmoor operation as above, seek voluntary redundancies from the Endmoor staff, and transfer some of the remainder to the other two sites. Any employees who have neither
volunteered for redundancy nor been re-deployed within the company at the end of this exercise will then be made compulsorily redundant.

Advise Whizz Computers on the legal provisions which apply to the proposed methods of reducing the workforce at their premises in
Endmoor.