In the face of public outrage and condemnation from Westminster following ever-increasing allegations of phone hacking, News International yesterday announced its decision to close the News of the World. Few could have expected this radical step, particularly the 200 employees whose future after the last edition on Sunday is now uncertain. Stephen Miller of MacRobert deconstructs the legal implications from an employment law perspective.

Closure of a workplace or business resulting in the proposed dismissals of over 99 employees requires statutory consultation to commence at least 90 days before any dismissals take effect. To comply with this obligation, News International would need to consult with the relevant trade unions on ways of avoiding the dismissals, of reducing the number of dismissals involved and mitigating the effects of the dismissals.

Closure of a workplace or business resulting in the proposed dismissals of over 99 employees requires statutory consultation to commence at least 90 days before any dismissals take effect. To comply with this obligation, News International would need to consult with the relevant trade unions on ways of avoiding the dismissals, of reducing the number of dismissals involved and mitigating the effects of the dismissals.

If rumours that staff have already been issued with notice of dismissal are true, News International is vulnerable to claims for protective awards for breach of the consultation requirements which could result in compensation of up to a quarter of the annual wage bill. Such dismissals would also be likely to be deemed unfair with maximum awards of £80,400 per unfair dismissal. Added to these potential penalties would be the costs of notice pay and redundancy payments. A modest estimate of these damages would be £2M.

If legal advice has been taken, it is perhaps more likely that the staff have been advised that the consultation period has commenced and that they are to be on garden leave pending the conclusion of the consultation, given the financial consequences of issuing notice without following the proper procedures.

Before any dismissals take effect, News International is also obliged to search for suitable alternative employment. This search should encompass vacancies across the News Corp group. If reports are to be believed, one post which will not be vacant is the role of Chief Executive of News International.

With the registration of domain names "TheSunOnSunday.co.uk" and "thesunonsunday.com" this week, rumours that the News of the World will simply be replaced by a Sunday edition of the Sun are rife. Politicians have been quick to criticise this possibility, describing it as "simply rebranding" and "a gimmick".

The question then arises as to whether the closure of the News of the World creates a redundancy situation at all. If the "Sunday Sun" were to be owned by a different entity from or within the News International group, this could well result in a "relevant transfer" of the work carried out on the News of the World to the new paper. If so, the employees assigned to that work would be entitled to transfer too in terms of the Transfer of Undertakings (Protection of Employment) Regulations 2006, taking with them their current terms and conditions and continuity of service. This may create a redundancy situation on the other side of the transfer which could lead to employees of the Sun being included in redundancy selection pools.

The impact of News International's decision is therefore far-reaching and the National Union of Journalists will no doubt be quick to protect its members' interests. It can only be assumed that the Murdoch empire weighed the risk of claims by employees against the on-going damage to reputation and loss of advertising revenue if the paper were to continue. Reports of the angry reactions of staff, most of whom were not employed at the time of the offending behaviour, however, suggest that this damage limitation exercise will be re-visited in detail in an employment tribunal before long unless mutually acceptable outcomes can be found.

Stephen Miller is an employment law specialist at MacRoberts and a member of The Firm's Editorial Board.