UK: Redundancy – collective consultation

In June 2015, a charity, Keeping Kids Company (KKC), applied for emergency government funding to avoid financial ruin with a business plan envisaging a restructure whereby potentially half of 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 came to light. 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 UK collective redundancy laws. It concluded that the business plan amounted to a ‘proposal to dismiss’ and in order to have complied with its obligations to consult in ‘good time’, KKC should have consulted ‘promptly’ after the business plan. This meant that events in August did not constitute a defence of a ‘special circumstance’ which is available to employers in exceptional circumstances. KCC appealed.

The EAT held that the Tribunal was entitled to conclude that the obligation to consult arose in June and not August, because the business plan in June foresaw immediate insolvency or large-scale redundancies being the only routes forward. 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 protective award.

Comment:
The obligation on an employer to begin collective consultation is triggered when there is 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. The case illustrates how the special circumstances defence is very difficult for employers to use in practice.

Keeping Kids Company (in compulsory liquidation) v Smith & Ors UKEAT/0057/17