Unexpected failure to secure government support not special circumstance

The Employment Appeal Tribunal has rejected Carillion’s argument that the Government’s decision to refuse an urgent request for financial support amounted to special circumstances which relieved it of its obligations to consult workforce representatives over redundancies. In doing so it has reiterated the narrow interpretation of the special circumstances defence set out in earlier case law.

The employment tribunal had concluded that the financial position of the Carillion Group had been deteriorating since July 2017. By the end of 2017 it was apparent that the Group would not be able to continue to trade for much longer without support from the Government. An urgent request for financial support was made on 31 December, but was rejected on 14 January 2018, though the Government did agree to take other steps to support an orderly dissolution of the Group’s operations. A compulsory winding up petition was submitted overnight, and granted in the early hours of the following morning.

The tribunal concluded that the duty to inform and consult collectively had not been triggered until the request for Government support had been refused. That was because, prior to that point, management had thought that there were good prospects of obtaining Government backing, and no redundancies had been “proposed” before then. However, the Government had not previously provided funding, and had given Carillion no reason to believe that their request would be granted. Following earlier case law, the employment tribunal concluded that this situation did not amount to special circumstances which relieved it of its obligations to consult workforce representatives.

The EAT has upheld this decision, and rejected arguments put forward on behalf of the employers that the need to move so rapidly to a winding-up petition itself demonstrated that the circumstances were special. The EAT said that the fact that there was no prospect of avoiding redundancies at the point the obligation to consult was triggered did not mean that Carillion could not have provided information and engaged with the unions about ways of mitigating the consequences of the redundancies.

There is more than a hint in the tribunal’s decision that Carillion was at least partly to blame for not anticipating at an earlier stage the impact its deteriorating financial situation would have on its workforce. But that is unlikely to have influenced the narrow interpretation given to special circumstances for these purposes, which has now been endorsed by the EAT. 

Employers in the future would therefore be best advised to do all they can towards compliance with their collective consultation obligations, even in a situation where events begin to run out of their control. In any event, even if the special circumstances defence is made out, it only relieves employers of any of the particular requirements set out in the legislation that it is not “reasonably practicable” to comply with. And even then, employers are still expected to take “all such steps towards compliance with that requirement as are reasonably practicable in those circumstances”.