The “special circumstances” defence
[ch 11: pages 381-383]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 fact that an employer is a charity or run by volunteers is not a “special circumstance”. Competent directors or governors would be expected to consult (E Ivor Hughes Educational Foundation v Morris & Others [2015] UKEAT/0023/15/LA).
The presence of special circumstances do not give an employer an absolute defence to a claim for a protective award, but 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 remained appropriate because the employer made virtually no effort to consult with staff before the company ceased trading.
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 also flawed because it mistakenly assumes that employees have nothing useful to contribute. If a business’s need to survive were a “special circumstance” then the same plea could be made by any business whose survival is threatened (E Ivor Hughes Educational Foundation v Morris & Others [2015] UKEAT/0023/15/LA).
The “special circumstances” defence is not available to an employer who fails to realise at the time that they owed a duty to consult. Only employers who actively consider their consultation duty at the right time and decide that they are unable to consult due to special circumstances are entitled to benefit from the defence. An employer is not allowed to argue after the event that had they realised at the appropriate time that they owed the duty, they would not have consulted 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 Innovation and Skills, out of the National Insurance Fund (section 182, ERA 96).
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).
Community union secures protective award for steelworkers
In March 2016, Community union secured a protective award of around £6.25 million for more than 1,100 workers following the closure of the Redcar steelworks without consulting the union. Payments were capped because the employer, Sahaviriya Steel Industries UK Limited (SSI), was insolvent. Describing the award as “deserved” , Community general secretary Roy Rickhuss said the “small victory” could not compensate for the devastation from the end of steel making.