Failing to consult 'promptly' leads to protective award

Keeping Kids Company v Smith

A charity breached its collective redundancy consultation obligations when it failed to start consultation ‘promptly’.

This case involved the well-known charity Keeping Kids Company (KKC) which in late 2014 encountered severe financial problems. The key dates and facts are as follows:

On 12 June KKC applied for a government grant and included a restructuring plan which envisaged half of its posts being deleted but with no specific posts being identified.
On 29 July the government offered the extra funding sought.
On 30 July it became public knowledge that the police were investigating certain safeguarding issues.
On 3 August the government told KKC that the grant was withdrawn and demanded repayment.
On 5 August KKC closed with all the employees being dismissed.

A tribunal (with the judge in the minority, i.e. the two lay members held sway) upheld a claim for protective awards from various employees for KKC’s failure to inform and consult as required by s. 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A 1992). KKC, along with the government (who would be liable for any awards) appealed.

EAT decision

The EAT dismissed the appeal. The tribunal was entitled to find that, as of 12 June, there was a ‘proposal to dismiss’ that might affect all of KKC’s staff, not simply those specifically identified. There was a clear, albeit provisional, intention to dismiss for redundancy and, given the potential impact this might have on all staff, this was not limited to specific categories of employees.

The EAT rejected KKC’s argument that it didn’t have enough information to comply with its obligations to engage in ‘meaningful consultation’ until it had heard back from the government about its grant application. The law specifically envisages that such information may become available during the consultation process.

The EAT also rejected KKC’s criticism of the tribunal’s use of the word ‘promptly’. The tribunal had not meant ‘immediately’ but rather was stating what it considered necessary for meaningful consultation to start in good time for the purposes of the legislation. The tribunal’s concern was not that KKC was required to start the consultation immediately, but that the delay that had already occurred before 12 June meant that it was already too late.

The law (s. 188(7) TULR(C)A 1992) allows employers to plead a ‘special circumstances’ defence. To do so they must prove there were special circumstances which made it not reasonably practicable to comply with their duties to consult and they took such steps as were reasonably practicable in the circumstances. However, this tends to be very narrowly defined by tribunals – and this case is no exception. The EAT held that the defence did not apply. Neither the application for a grant nor the publicity on 30 July were relevant.

The EAT did allow one aspect of KKC’s appeal. The tribunal should not have awarded the full 90 days’ protective award. Although the events of 30 July did not amount to a ‘special circumstances’ defence, they were relevant to the assessment of the appropriate award - and the tribunal had failed to recognise this.

Link to judgment: http://www.bailii.org/uk/cases/UKEAT/2018/0057_17_2102.html

Comment

This case illustrates the fact that once an employer forms a clear intention to dismiss 20 or more employees for redundancy the duty to start collective consultation is triggered, notwithstanding the fact that the intention is only provisional or that the exact roles ‘at risk’ have not been identified.

The case also shows that the scope of the ‘special circumstances’ defence is very limited and is only likely to be apply in not just ‘special’ but ‘exceptional’ circumstances. However, the one saving grace is that if the defence does not apply there is still an opportunity that the ‘special circumstances’ could be taken into account in reducing the protective award.