The “special circumstances” defence

A tribunal should make a protective award unless the employer can point to special circumstances that meant it was not reasonably practicable to consult. Even if the employer can point to special circumstances, it must still show that it took all reasonably practicable steps to comply. Tribunals should interpret this defence narrowly. Special circumstances must be something unforeseen or unexpected.

Being able to point to special circumstances will not give an employer an absolute defence to a claim for a protective award, but it can reduce the size of the award to reflect the employer’s efforts to consult effectively in the time available (Shanahan Engineering Ltd v Unite the Union [2010] UKEAT/0411/09).

An employer cannot escape its duty to consult in good time by claiming it did not have all necessary information. If some information is available, it must consult (GMB and Amicus v Beloit Walmsley [2004] IRLR 18).

Insolvency is not, on its own, a special circumstance entitling the employer to avoid consultation (Iron and Steel Trades Confederation v ASW Holdings [2004] IRLR 926). However, in AEI Cables Ltd v GMB and Unite [2013] UKEAT 0375/12/0504, the EAT cut a 90-day protective award to 60 days because it was not reasonable to expect the employer to continue trading in order to consult once it had received advice from its accountants that there was a risk of trading when insolvent, which would have incurred personal liability for the directors. Even so, a 60-day award was made since virtually no effort had been made to consult before this point was reached.

The amount of the protective award is capped in cases of insolvency and is paid by the Redundancy Payments Office, a division of the Department for Business Innovation and Skills from the National Insurance Fund (section 182 ERA 96).

The fact that an employer believes consultation would have made no difference to the end result is irrelevant to liability for a protective award (Sovereign Distribution Services v TGWU [1989] IRLR 334). A protective award can still be claimed even if a company goes into receivership (AEEU/GMB v Clydesdale Group [1995] IRLR 527).

For more details and examples, see LRD’s updated guide Redundancy law — a guide to using the law for union reps (www.lrdpublications.org.uk/publications.php?pub=BK&iss=1690).