The ‘special circumstances’ defence
[ch 11: pages 383-385]A tribunal should make a protective award unless the employer can point to special circumstances that made it “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. This defence to the failure to consult is interpreted narrowly. Special circumstances must be something unforeseen or unexpected, out of the ordinary or uncommon, for example “where sudden disaster strikes the company, making it necessary to close” (The Bakers’ Union v Clarks of Hove Limited [1978] IRLR 366, Keeping Kids Company (in compulsory liquidation) v Smith and Others [2018] UKEAT/0057/17/BA).What is “special” will depend on the facts of the particular case. The burden is always on the employer to establish the “special circumstances”.
The fact that an employer is a charity or run by volunteers is not a “special circumstance”. Competent directors or governors are expected to consult (E Ivor Hughes Educational Foundation v Morris & Others [2015] UKEAT/0023/15/LA).
The presence of special circumstances does not provide an absolute defence to a claim for a protective award. Rather, a tribunal can reduce the size of the award to reflect the efforts made to consult in the time available, sometimes to as much as zero (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 was still appropriate, because the employer made virtually no effort to consult with staff before the company ceased trading (see also Keeping Kids Company (in compulsory liquidation) v Smith and Others [2018] UKEAT/0057/17/BA).
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).
Fears that staff might leak information to the outside world about impending redundancies and “seal the organisation’s fate”, or that “secrecy is the organisation’s best chance of survival” are not “special circumstances”. Such fears are normal in any redundancy situation and can easily be managed by warning staff that information is confidential and that breach of the duty of confidence would be gross misconduct. Keeping information secret on this basis is flawed in any event, because it mistakenly assumes that employees have nothing useful to contribute (E Ivor Hughes Educational Foundation v Morris & Others [2015] UKEAT/0023/15/LA).
The “special circumstances” defence is not open to an employer who does not realise at the correct time that they should be consulting collectively. It is only available to an employer that actively considers its statutory duties and decides that it is not possible to consult effectively in the time available. In other words, an employer is not allowed to argue after the event that had they appreciated that they owed the statutory duty, they would not have consulted anyway due to “special circumstances” (E Ivor Hughes Educational Foundation v Morris & Others [2015] UKEAT/0023/15/LA).
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, Energy & Industrial Strategy, out of the National Insurance Fund (section 182, ERA 96). (See page 411: Insolvency).
LRD booklet: Redundancy law — a guide to using the law for union reps (www.lrdpublications.org.uk/publications.php?pub=BK&iss=1690)