Acumen News & Events

17 May 2010

Is pressure from third party sufficient to remove the duty to consult in collective redundancy?

Can the need to consult over redundancy be removed?

An answer to this question was provided in the case of Shanahan Engineering Limited v Unite the Union. The Employment Appeal Tribunal (“EAT”) held that external pressure put on an employer to make redundancies may amount to special circumstances which make it not reasonably practicable to comply with the specified time frame for collective consultation. However, unfortunately such special circumstances will not remove the need to consult with the affected employees in some form.   

Shanahan Engineering Limited had been contracted to work on the construction of two generators simultaneously for Alstom. However, on 1st May 2008, Alstom confirmed that due to health and safety concerns, the generators should be built sequentially rather than simultaneously which of course would lead to an inevitable reduction in the workforce. Alstom asked that Shanahan confirm by the end of that day that they had implemented the required actions.

As an agreed method of selection for redundancy was already in place, 50 employees were made redundant with effect from 2nd May 2008. This was of course in breach of the requirement for consultation to take place in good time with appropriate representatives of the affected employees. In particular section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 applies, as there were more than 20 employees, consultation should have taken place at least 30 days before the first of the dismissals takes effect.

In the Employment Tribunal Shanahan relied on the defence that there were special circumstances which made it not reasonably practicable to comply with the consultation requirements, in particular, they relied on the external pressure from Alstom. The Tribunal considered this and confirmed that such circumstances were sufficient to relieve Shanahan from its duty to start consultation at least 30 days before the dismissals.

However, it found Shanahan to be in breach of its obligations under section 188. As it considered that consultation in some form should have been carried out, even if had only lasted a few days. It considered this to be a serious failure and therefore awarded protective awards to the employees concerned for the maximum 90 day period.

The EAT upheld the reasoning of the Tribunal and agreed that Shanahan was in breach of section 188. However, it did not agree with the award of a 90 day protective period. It held that, as special circumstances had been found to lie behind the failure to consult, these should be taken into account as mitigating circumstances in relation to the award of the protective period.

This case reinforces the importance of consultation in a redundancy procedure and, even where special circumstances exist which may make compliance with the statutory timetable difficult, employers should endeavour to consult with employees as much as possible. 

Are you considering making employees redundant and would like to some advice in respect of the redundancy procedure? If so please call us today to discuss your options on 01244 357 211.