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What is meant by “special circumstances”?
A tribunal should make a protective award unless the employer can point to “special circumstances” making it not reasonably practicable to consult. Even if the employer can point to special circumstances, it must still demonstrate that it took all reasonably practicable steps to comply. Tribunals tend to interpret this defence narrowly. Special circumstances must be something unforeseen or unexpected.
“Special circumstances” do not provide an absolute defence to a claim for a protective award, but they can reduce its size, or even, in some circumstances, eliminate the award altogether, depending on the employer’s efforts to consult effectively in the time available. For example:
Alstom sub-contracted engineering construction firm Shanahan to build a new generator. As the work was short-term, some redundancies at the end of the project had already been anticipated, and Shanahan and Unite, the recognised union, had pre-agreed a selection process for those redundancies, ready for when the time came. But an unexpected problem with site congestion caused a health and safety concern that needed resolving urgently, so Shanahan selected 50 people for redundancy within three days, using the already agreed selection criteria.
The EAT agreed that “special circumstances” released Shanahan from the duty to carry out a full 30 day consultation. However, Shanahan was found to be at fault in failing to make any attempt at consultation at all, even if just over a few days.
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 be consulted over (GMB and Amicus v Beloit Walmsley EAT/1094/02 [2004] IRLR 18).
Insolvency is not, by itself, 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 reduced a 90-day protective award to 60 days on the basis that it was not reasonable to expect the employer to continue trading so that it could inform and consult once it had received advice from its accountants that there was a risk the company was trading while insolvent, which would have meant personal liability for the directors.
The amount of the protective award will be capped in cases of insolvency and is payable by the Redundancy Payments Office, a division of the Department for Business Innovation and Skills out of the National Insurance Fund (section 182 ERA 96).
The employer is still liable for a protective award, even if it believes consultation would have made no difference to the outcome (Sovereign Distribution Services v TGWU [1989] IRLR 334) and even if a company goes into receivership (AEEU/GMB v Clydesdale Group [1995] IRLR 527).
For more details and examples, see Redundancy law — a practical guide, LRD 2011 www.lrdpublications.org.uk/publications.php?pub=BK&iss=1581