A duty to collectively consult under s188 of the Trade Union and Labour Relations (Consolidation) Act 1992 was triggered when Keeping Kids Co submitted an application for a government grant, not when the outcome of the grant application was known. The company had breached its obligations to consult “in good time” leading to protective awards being made.
Keeping Kids Company was in serious financial difficulties and had applied on 12 June 2015 for a government grant. The grant application included a restructuring plan which showed over half of all posts would disappear. It was understood that if the grant application was unsuccessful, this would mean the company would be insolvent.
The grant was initially successful but was later terminated in August 2015 due to safe guarding issues being investigated by police. The company closed soon after and all the employees were dismissed. A number of employees succeeded in their claims for protective awards for failure to inform and consult under s188.
The EAT upheld the Employment Tribunal’s decision that the company had had a “proposal to dismiss” more than 20 employees at the time of the grant application. That was the point at which the collective consultation obligations were triggered and therefore the company had failed to consult “in good time”.
Digging into the detail
At the point the grant application was made, the EAT found that the company had a clear, albeit provisional, intention to dismiss for redundancy. It did not matter that the company did not know the actual names of the employees who would be dismissed and it was not acceptable for the company to argue that it could not collectively consult until it knew the outcome of the grant application.
Why is it important?
If there is a clear intent to dismiss at least 20 employees for redundancy then this is the point at which the collective consultation obligation will be triggered. It does not matter that you may not know which specific posts or employees are likely to go. Failure to begin collective consultation at this point will mean a failure to inform and consult and may have hefty financial implications (90 days’ pay per employee).
Keeping Kids Company v Smith and others UKEAT/0057/17