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Collective Consultation - When Must an Employer Consult with Their Employees?

on Friday, 02 March 2018.

In a recent case involving Keeping Kids Company (KKC), the Employment Appeal Tribunal (EAT) upheld the Employment Tribunal's (ET) decision that KKC was in breach of its collective consultation obligations.

This case highlights when employers must begin collective consultation and the difficulties employers encounter when relying on a 'special circumstances' defence when they are in breach.

The Relevant Law

Under s188 Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), an employer is obliged to collectively consult with appropriate representatives of affected employees if it is "proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less."

The law requires consultation to "begin in good time" and in any event, where there is a proposal to dismiss 100 or more employees at least 45 days before the first of the dismissals takes effect. Where proposals relate to fewer than 100 employees, consultation must begin at least 30 days before the first dismissal takes effect.

The Timeline of Events

  • 12 June 2015, KKC applied to the government for a grant of £3 million. The application included a business plan to restructure KKC by late September 2015. The plan anticipated that over 50% of roles would be deleted, however no specific positions were identified.
  • On 29 July 2015, the government accepted the application for a grant on the basis of the proposals submitted by KKC.
  • On 30 July 2015, it became known that KKC was being investigated by the Metropolitan Police regarding safeguarding issues.
  • On 3 August 2015 the Cabinet Office terminated the grant and ordered repayment of the unspent portion.
  • On 5 August KKC closed and all employees were dismissed. As a result, a number of employees brought claims in the ET for failure to inform and consult over collective redundancies under section 188 of TULRCA.

Decision

At first instance, the ET found that KKC was in breach of its collective consultation obligations. The case went to the EAT on appeal by KKC, but its appeal was dismissed.

The EAT upheld the ET's finding that by 12 June 2015, there was a 'proposal to dismiss' which might affect any or all of KKC's employees. This was on the basis that the proposal allowed for only two outcomes: immediate insolvency which put everyone at risk, or large-scale redundancies where over half of the staff were dismissed.

The EAT found that it was no answer for KKC to say that it did not have sufficient information to comply with its s188 obligations until it had received the government's response to its grant application. There was no obligation to provide the actual names of those employees that were proposed to be made redundant.

In terms of when the obligation to consult arose, the EAT noted that the law requires employers to consult 'in good time' so as to allow for the consultation to be 'meaningful'. It held that the ET had been entitled to find in the particular circumstances that in order to be meaningful (given the delay that had occurred before KKC had formulated its 12 June 2015 proposal), consultation had to start 'promptly.' The ET's concern was not that KKC was required to start the consultation process immediately but that the delay that had occurred before 12 June meant that it was already too late.

The EAT clarified that the requirement to consult 'in good time' did not oblige an employer to commence the consultation process immediately once it had formulated the relevant proposal. Instead, an employer is required to "look ahead and realistically assess the time-scale required to ensure meaningful consultations can be held (having particular regard to the minimum time periods set out under s188(1A))."

The EAT rejected KKC's argument that the outstanding application to the government or the investigation by the Met were 'special circumstances' excusing KKC from their obligation to consult. The Met investigation on 30 July 2015 was irrelevant given that the obligation to consult had already arisen by 12 June 2015.

Best Practice

  • Where an employer is proposing to dismiss 20 employees or more, there are strict timelines that must be adhered to regarding collective consultation.
  • Once the duty to consult has arisen, s188 TULRCA requires that consultation shall begin 'in good time'. An employer must therefore make an assessment of the time required in which to conduct a meaningful consultation, bearing in mind the minimum periods required by s188. This obligation would not however require employers to commence consultation immediately if this was not strictly necessary to allow meaningful consultation to take place.
  • As this case demonstrates, the obligation to collectively consult may be triggered even if specific job roles or groups of employees have not been identified at risk.
  • This case also highlights how difficult it will be for employers to rely on the 'special circumstances' defence.
  • The EAT did however allow KCC's appeal on the limited ground that the events of 30 July 2015 should be taken into account when assessing the appropriate protective award to be ordered by the ET. At first instance, the ET had concluded that KCC had not demonstrated any reason as to why a lesser award should be made in the circumstances.

For more information please contact Eleanor Boyd in our Employment law team on 020 7665 0940.

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