In good time

The Employment Appeal Tribunal (EAT) has held in Keeping Kids Company (In Compulsory Liquidation) v Smith and Others that events which occur after a proposal to make more than 20 employees redundant cannot be used as a defence for failing to consult under section 188 Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). However, it might make a difference to the size of the award.

Thompsons were instructed by Unite the Union to represent its member.

Basic facts

After getting into financial difficulty, Keeping Kids Company (KKC) applied for a government grant in June 2015. The application included a plan to dismiss over half its employees on the ground of redundancy by September 2015. The application was successful and KKC received £3m from the government on 29 July 2015, However, following a police investigation into child sex abuse allegations which was reported to the media on 30 July 2015, KKC was unable to meet the requirement of securing matching donations from philanthropists as a result of the publicity and the government asked for the money to be returned.

KKC closed down on 5 August 2015 and all its employees were dismissed by reason of redundancy. As the company had not complied with its obligations under section 188 of TULRCA a number of employees made claims for protective awards.

KKC closed down on 5 August 2015 and all its employees were dismissed by reason of redundancy. As the company had not complied with its obligations under section 188 of TULRCA a number of employees made claims for protective awards.

KKC argued that as they did not know the exact names of the employees who would be made redundant they could not have started the consultation process in June. It also argued that the adverse publicity on 30 July 2015 constituted “special circumstances” under TULRCA.

Relevant law

Section 188(1) states that employers proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less must consult the appropriate representatives of anyone who may be dismissed.

Section 188(1A) states that the consultation must begin “in good time” and in any event at least 45 days if 100 or more employees are to be dismissed; otherwise within 30 days.

Section 189(6) states that, following a complaint of a failure to consult, it is for the employer to show there were “special circumstances” which meant it was not reasonably practicable for them to comply.

Tribunal decision

A majority of tribunal members held that, as there was a “proposal to dismiss” relating to a significant proportion of KKC employees by 12 June 2015, the company should have started the consultation process promptly after that date. As KKC had failed to show there were any mitigating circumstances, it made a declaration to that effect and granted the full protective award of 90 days’ pay to the claimants.

KKC appealed arguing that the tribunal was wrong to hold that its obligation to consult was triggered in June 2015; that there were no special circumstances preventing compliance with section 188; and that there were no mitigating circumstances preventing the full 90 days’ protective award.

EAT decision

The EAT held that the tribunal was right to conclude that the obligation to consult was triggered by the restructuring proposal contained in the June 2015 grant application.

It was also right to conclude that the consultation needed to start “promptly” after 12 June 2015 in order to ensure that meaningful consultation could commence for the purposes of section 188(1A). This did not mean immediately, but rather was a reference to the obligation to consult “in good time”. The EAT also confirmed that the tribunal was correct to conclude that the events of 30 July 2015 did not amount to a special circumstance defence.

However, as the tribunal had effectively acknowledged that the events of 30 July 2015 had prevented any further consultation taking place, this was a mitigating circumstance and should have been taken into account when considering the period covered by the protective award. As such, the period from 12 June to 30 July 2015 could not provide KKC with a mitigating factor defence. The EAT therefore remitted this point to the tribunal to decide the correct protective award.