Maximum Protective Award Where Employer Unaware of Collective Consultation Obligations

An employer has been ordered to pay 90 days’ pay to each employee after it failed to carry out any collective consultation about proposed redundancies. The fact that the employer was unaware of its legal obligation to undertake collective redundancy consultation was no excuse.

In E Ivor Hughes Educational Foundation v Morris, the number of pupils at a school was on the decline. In February 2013, there was a meeting of the school governors at which the projected number of pupils was discussed and options for keeping the school open were considered. In April 2013, the number of pupils for the next academic year was confirmed as lower than predicted. A further governors’ meeting was held at which it was decided that the school would close at the end of the summer term. Four days later, the governors gave the staff one term’s notice of termination.

No collective redundancy consultation was carried out and it appeared that the governors were unaware of their legal obligations in this regard.

The employees brought claims for a protective award. The employment tribunal ruled that the duty to consult collectively was triggered at the governors’ meeting in February when the governors decided that the school would be closed unless pupil numbers improved.

The employer sought to argue that there were special circumstances which made it not reasonably practicable to consult in both February and April. If consultation had commenced in February, the possible closure of the school would have been leaked, parents would have removed their children and the school’s fate would have been sealed. The employment tribunal rejected this argument, as this could have been addressed by making it clear that the proposal was confidential and that any breach of confidentiality would constitute gross misconduct. The employer also argued that it had to give notice of termination in April in order to avoid tripping a further term’s notice. The employment tribunal ruled that an employer’s contractual obligations could not amount to special circumstances.

The employment tribunal concluded that there were no mitigating factors and as no consultation had taken place it awarded a protective award of 90 days’ pay per employee.

The Employment Appeal Tribunal (EAT) rejected the employer’s appeal. As the employer was unaware of its obligation to consult collectively, it could not rely on a special circumstances defence. When assessing whether there are special circumstances, it is necessary for there to be an historic assessment of actual events and the practicalities of consultation at the relevant time. Circumstances an employer identifies in hindsight cannot amount to special circumstances.

The EAT also upheld the tribunal’s decision regarding the amount of the protective award. The fact that the employees had suffered no loss was not relevant as the award is meant to punish the employer, rather than compensate the employee. The tribunal had taken into account the fact that the employer’s failure had not been deliberate but had found its ignorance of the law arose from a “reckless failure” to seek legal advice.

The EAT also upheld the tribunal’s decision that the employer’s collective consultation obligations were triggered in February when the governors decided that the school would be closed unless pupil numbers improved.

Employers who are unaware of their collective redundancy consultation obligations cannot argue that there are special circumstances making it not reasonably practicable to comply. They can only rely on matters which actually prevented them from consulting at the time, not on circumstances identified in hindsight.

When setting the level of a protective award, employment tribunals are required to take into account the seriousness of the employer’s default. Tribunals are likely to treat reckless failure in a similar fashion to deliberate failures.