Case round-up: Shanahan Engineering v Unite the Union, EAT

Shanahan, an engineering construction contractor, employed more than 145 people on a site, constructing two generators. The short-term work meant that a number of redundancies were expected. Shanahan and Unite agreed a selection process in advance. For health and safety reasons Shanahan’s client, Alstom, instructed Shanahan to drastically change the nature of the work at short notice. Shanahan had to make 50 redundancies quickly.

Collective consultation

Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) requires employers to consult collectively (with unions or elected representatives) where 20 or more redundancies are proposed within a 90-day period. Consultation should start at least 30 days before the first dismissal takes effect.

There is an exception for special circumstances” which make it not reasonably practicable to carry out the normal 30-day consultation. Shanahan made 50 redundancies without carrying out any consultation. Unite brought a claim on behalf of employees that Shanahan had failed to comply with section 188 TULRCA. The tribunal decided Shanahan had breached its duty to consult. Even though the “special circumstances” defence applied, Shanahan should have carried out however much consultation was possible in the time available. The tribunal awarded maximum 90-day protective awards in relation to the employees.

Shanahan appealed. The EAT said because special circumstances existed which affected the timing of the consultation, the obligation to consult still remained. The EAT upheld the tribunal’s decision that Shanahan had failed to consult but remitted the case for the tribunal to reconsider the level of the protective award.

The special circumstances were an important factor that should have been weighed when deciding the award.

Key points

  • Even where the “special circumstances” defence applies to absolve an employer from completing a full consultation process, the obligation to inform and consult, even in a short period, may still remain.
  • The special circumstances defence will only arise in narrow circumstances.
  • The protective award is not compensatory but is a penal award to provide a sanction for the employer’s breach. The tribunal should consider all circumstances, and make an award that is just and equitable.

What you should do

  • Always consider whether collective information and consultation requirements apply when making redundancies. When redundancies need to be made quickly due to special circumstances, conduct whatever consultation you can.

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