An employer is legally obliged to collectively consult if it is “proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less”. There is a defence for businesses that fail to comply with this consultation requirement if there are “special circumstances which render it not reasonably practicable” for the employer to comply with the requirements to begin consultation in good time and within the applicable minimum period.
Keeping Kids Company (a charity) had been in financial difficulties from 2014 onwards and ultimately was put in compulsory liquidation. It had applied in June 2015 for a government grant on the basis that it could secure matched funding however due to the charity being investigated regarding safeguarding issues the Cabinet Office notified Keeping Kids Company (“KKC”) that the grant agreement was terminated and there was an immediate request repayment of unspent money. This occurred on 3 August 2015 and subsequently, on 5 August 2015, KKC dismissed all its employees and stopped operating and a compulsory winding-up order was made. There was no consultation and as a result a number of employees brought claims for Protective Awards for failure to inform and consult in relation to the legal obligations in a collective redundancy.
The Employment Tribunal held that consultation had to begin “promptly” and that should have taken place after 12 June 2015. This was a majority decision by the lay members of the Employment Tribunal and they took the view that there was no guarantee that this charity would remain solvent even with the government funding application and that these events precipitated the actual demise of the charity and were not a “special circumstance” under the legislation. The Tribunal made a protective award of the maximum 90 days’ pay for each of the employees.
The Employment Appeals Tribunal upheld this decision and held that the Tribunal was entitled to conclude that at 12 June there was a proposal that might affect all of the charity’s employees, not simply those specifically identified in the business plan that accompanied the grant application therefore consultation should have commenced at this date. The Employment Appeals Tribunal made it clear that the obligation to begin a collective consultation is triggered when there is a clear intent to dismiss at least 20 employees for redundancy; it does not matter if it has not yet identified which employees are potentially at risk, in addition it stated that the “special circumstances” that occur after the obligation to consult arises cannot excuse an earlier failure to comply.
One aspect of the appeal was overturned namely the 90 days’ award, the Judge of the Employment Appeals Tribunal stated that the maximum point of 90 days’ is the starting point when considering a Protective Award but that the Tribunal might consider it just and equitable to reduce that period where there were mitigating circumstances, having due regard to the seriousness of the employer’s default and therefore the appeal was allowed on this point.
Employers in collective consultation should always seek professional legal advice as these awards are punitive in nature.
Maxine Orr is a Partner specialising in Employment Law in Worthingtons Commercial Solicitors Belfast.