You may remember the press coverage of the investigation into the former children’s charity Keeping Kids Company and its eventual liquidation in the summer of 2015. The Employment Appeal Tribunal has now ruled that the charity breached collective redundancy laws by failing to collectively consult in the run-up to it stopping operations.
When proposing to dismiss 20 or more employees within a period of 90 days at one establishment, section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 requires employers to inform and consult with representatives of affected employees. Consultation must begin in ‘good time’. A breach of these collective consultation requirements entitles employees to a protective award of up to 90 days’ pay.
The charity suffered ongoing financial difficulties and on 12 June 2015 applied for a government grant of £3 million. The application included a business plan to restructure the company and discussed removing 50% of the posts. No specific posts were identified at that point. On 29 July the government offered the grant. The charity sent an email to all staff saying that matters had been resolved and salaries would be paid the next day. On 30 July it became known that the police were investigating allegations against the charity concerning the safeguarding of children. On 3 August the government terminated the agreement and demanded repayment of the grant. On 5 August the charity closed and all employees were dismissed.
Some employees won protective awards for failure to inform and consult over the redundancies. The judge decided that consultations with employee representatives should have begun promptly after 12 June when there was a proposal to dismiss, even though the charity did not know which roles would be deleted. The events in August did not excuse the obligation to consult, but they did reduce the size of the eventual award.
If your business is proposing collective redundancies you should ensure that consultation begins promptly after the proposal is made, even if you don’t yet know all of the detail.