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 special circumstances prevented full consultation, the employer must still show that it took all reasonably practicable steps to comply with consultation duties in the time available. Tribunals should interpret this defence narrowly. Special circumstances must be something unforeseen or unexpected.

The presence of 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 efforts made to consult 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 a special circumstance entitling the employer to avoid consultation (Iron and Steel Trades Confederation v ASW Holdings [2004] IRLR 926).

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 been advised by its accountants that it risked trading when insolvent, for which the directors would have been personally liable. Even so, a 60-day award remained appropriate because the employer made virtually no effort to consult with staff before the company ceased trading.

The amount of a protective award is capped in cases of insolvency and paid by the Redundancy Payments Service, a division of the Department for Business Innovation and Skills, out of 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 guide Redundancy law — a guide to using the law for union reps (www.lrdpublications.org.uk/publications.php?pub=BK&iss=1690).