Collective redundancies and special circumstances

The Employment Appeal Tribunal (EAT) has upheld in Carillion Services Ltd (in compulsory liquidation) and ors v Benson and ors, that the lack of financial support from lenders and the government does not amount to ‘special circumstances’ for the purposes of collective redundancies and the duty to consult appropriate representatives, under s. 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA, 1992).

Despite the Carillion group accumulating a turnover of £5.2 billion in 2016, it experienced significant financial difficulties no later than July 2017, resulting in liquidation on 15 January 2018. The company argued that their failure to consult was due to ‘special circumstances’ within the meaning of s. 188(7) TULRCA 1992, and relied on ‘sudden intervening events’ across 13-14 January 2018, when the company’s financial stakeholders rejected short-term lending arrangements in the absence of government guarantees. However, the tribunal dismissed the ‘special circumstances’ defence, with reference to the Court of Appeal’s decision in Clarks of Hove Ltd v Bakers’ Union 1978 ICR 1076, stating that the events must be something ‘out of the ordinary’ or ‘uncommon’. The tribunal concluded that the events that occurred over 13-14 January 2018 followed a history of decline, and there was no evidence the government ever provided the company with cause to believe that support would be available. Therefore, the lack of financial support was not considered out of the ordinary or uncommon.

The company appealed to the EAT, and the appeal was subsequently dismissed. The EAT held that the mere fact a circumstance impacts an employer’s ability to comply with an obligation under s. 188 TULRCA 1992, does not render it special. If this were the case, the EAT considered that any employer could highlight a factor that made it difficult to consult and rely on this defence. Essentially, there is still value in consulting, even in situations where dismissal cannot be avoided.

Advice

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