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Failure to consult

GMB and others v Amicus and others [2003] IRLB 721

The EAT has recently considered the meaning of the exception to the "special circumstances" defence to breaches of the obligations to inform and consult about collective redundancies.

BW Ltd was part of a group which had been acquired by a subsidiary of BC Inc. The ultimate holding company of the group was HII. In June 1999 HII and BC Inc applied for bankruptcy protection. On 18 November 1999 the directors of BW Ltd were informed by HII that it was no longer prepared to provide it with financial support. On 22 November 1999 BW Ltd was placed in administration. Following consultations between BW Ltd's administrators, the recognised trade unions and employee representatives, 55 employees were dismissed on the ground of redundancy on 29 November 1999. On 9 December 1999 BC Inc (which provided BW Ltd with 80% of its work) informed the administrators that it could offer only a limited amount of work for a 9 week period. In light of this, on 16 December 1999 the administrators dismissed a further 68 employees for redundancy. GMB and Amicus presented complaints to an employment tribunal that BW Ltd had failed to comply with the consultation requirements of s188 of the Trade Union and Labour Relations (Consolidation) Act 1992.

The Tribunal held that there were special circumstances which made it not reasonably practicable for BW Ltd to comply with its s188 obligations. GMB and Amicus appealed to the EAT complaining that the Tribunal had made errors of law in relation to its interpretation of s188(7). S188(7) provides that:

"Where the decision leading to the proposed dismissals is that of a person controlling the employer (directly or indirectly), a failure on the part of that person to provide information to the employer shall not constitute special circumstances."

The EAT looked to the Collective Redundancies Directive to interpret the s188 provisions, noting the requirement to consult 'in good time' and provide employees with 'all relevant information' including certain specific information. Under the Directive it is no defence to a claim that a parent company had failed to provide 'necessary information' which includes information necessary to begin the consultation process. The EAT held that information under s188(7) meant information necessary to start the consultation process, as well as the giving of information required by s188(4).

The EAT then turned to consider the phrase "leading to the proposed dismissals". It held that a decision would lead to proposed dismissals if it gave rise to the occurrence of the dismissals and the person making the decision contemplated that it would have that consequence.

The EAT held that the Tribunal had erred in law in finding that an employer who failed to comply with its obligations to inform and consult about collective redundancies had made out a "special circumstances" defence. The EAT remitted the matter back to the Tribunal to make further findings of fact, but gave the following guidance. Any period between the making of a decision that leads to redundancies by a controlling undertaking (if the person making it contemplates that some redundancies will follow from it) and the date on which the employer is informed of the decision should be disregarded when a Tribunal is considering whether or not there are special circumstances making it reasonably practicable for the employer not to have complied with its obligations.