When Does the Duty to Consult Arise?

The Trade Union and Labour Relations (Consolidation) Act 1992 (the “Act”) provides that, where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult the appropriate representatives of any employees who may be affected. Consultation must begin in good time and, in any event, at least 30 days before the first dismissal takes effect (which is extended to 45 days where the employer is proposing to dismiss 100 or more employees). If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with the duty to consult, the employer shall take all such steps towards compliance as are reasonably practicable. The Act provides for a protective award, not in excess of 90 days’ gross pay, for failure to comply with the duty.

The recent case of E. Ivor Hughes Educational Foundation v Morris and Others [2015] has considered the question of when it is that the employer “proposes” such dismissals for the purposes of triggering the obligations under the Act.

The employer, which operated a girls’ school, had decided at a meeting of the governors in February 2013 that the school would close, unless the declining number of pupils increased. The final decision to close the school was taken in April 2013, when the pupil numbers for the forthcoming academic year were known, and the employees were only then given notice of dismissal on grounds of redundancy. The employer did not consult with employee representatives about the proposed redundancies prior to giving notice. In addition to their claims for unfair dismissal, 24 employees claimed that there had also been a breach of the duty to consult under the Act.

On appeal to the Employment Appeal Tribunal (EAT), the employer argued that the Employment Tribunal (ET) had erred in law by finding that the duty to consult arose in February 2013 because there was no evidence upon which it could find that the governing body had decided on that date to close the school. The employer also argued that there were special circumstances rendering it not reasonably practicable to consult at that stage, suggesting that consultation in February 2013 would have sealed the school’s fate as details of the closure would have leaked and parents would have removed their children from the school. The employer further argued that, in waiting until April 2013, the school was given the best chance of survival.

The EAT held that the ET was entitled to find that the decision in February 2013 to close the school unless numbers increased, was either a fixed and clear (albeit provisional) intention or amounted to a strategic decision on changes, thereby compelling the employer to contemplate or plan for collective redundancies in February 2013. The EAT further concluded that there were no special circumstances which made it impracticable to consult, noting that such a circumstance must be something out of the ordinary or something uncommon. The EAT noted that the failure to consult arose because the governors did not know that they had a duty to do so; this was not a special circumstance. In any event, if the staff were told that they had 30 days to come up with proposals to save their jobs, and that this was a confidential matter, there was no reason to believe that it would not have been taken seriously. In the circumstances, it concluded that a protective award of 90 days’ pay in respect of each employee was appropriate. The EAT held that the fact that the employees had not suffered actual loss was not a mitigating factor justifying a reduction of the protective award.

What does this mean for employers

Employers facing a similar scenario will need to weigh up the commercial reasons for delaying the duty to consult, as against the risk of facing protective awards for failure to comply with the duty, and should ensure that no decisions (provisional or otherwise) are taken until the employer is ready to consult with the employees. Failure to do so may result in an expensive protective award, irrespective of the actual loss suffered by the employees. Employers should also bear in mind that it is only in special circumstances, which must be something out of the ordinary, that the duty to consult may be limited.

As ever, if any queries arise, please contact the Employment Team.

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