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Redundancy: Collective Consultation

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Can events occurring after 20+ redundancy dismissals are proposed, provide a defence to a claim for failing to inform and consult?

No, held the EAT in Keeping Kids Company (in compulsory liquidation) v Smith & Ors, but they may affect the size of an award.

In June 2015, KKC applied for emergency government funding to avoid financial ruin with a business plan envisaging a restructure whereby half its staff might be dismissed within a few months.

On 29 July a grant was offered but revoked on 3 August when a police investigation into safeguarding issues at KKC became apparent. On 5 August KKC closed, dismissing its staff.

The tribunal heard a number of claims for protective awards for failure to inform and consult under s188 TULR(C)A. It found the business plan constituted a ‘proposal to dismiss’ and s188(1A)’s reference to consulting within ‘good time’ meant KKC should have consulted ‘promptly’ after the business plan, such that events in August did not constitute a defence of a ‘special circumstance’ for s188(7). KCC appealed.

The EAT held the Tribunal was entitled to conclude the obligation to consult arose in June not August as the business plan in June foresaw only immediate insolvency or large-scale redundancies. Whilst events in August did not excuse the obligation to consult, which crystallised beforehand, they could be relied on to reduce the size of the award.

Thanks to Barnaby Large of No.18 Barristers Chambers for preparing this case summary.