In the case of Keeping Kids Company v Smith and others, the Employment Appeal Tribunal (“EAT”) looked at whether a charity breached its collective redundancy consultation obligation in the lead-up to its insolvency.
The EAT dismissed an appeal against an Employment Tribunal’s (“ET”) decision that the charity had breached its obligation by failing to commence the collective consultation process “promptly” after submitting a business plan in which it was envisaged that more than half of the staff would be made redundant.
Background
Keeping Kids Company (“KKC”) was a national children’s charity. KKC was facing acute financial difficulties and on 12 June 2015, it made an application to the government for a grant on the basis of a business plan. The business plan set out a restructuring proposal, which involved making more than half of KKC’s staff redundant, but no specific posts were identified as at risk. On 29 July 2015, the government approved the grant as per KKC’s proposal. Shortly afterwards, KKC was investigated by the Metropolitan Police. Subsequently, the government demanded immediate repayment of the grant, which resulted in the closure of KKC and the dismissal of all of its employees as redundant on 5 August 2015.
Employers are required to collectively consult when there is a proposal to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. A number of the employees brought claims for protective awards for a breach of KKC’s duty to inform and consult in respect of the redundancies. KKC argued that it had not been in a position to begin consultation until it had received a reply from the government (on 29 July) confirming whether the proposed redundancies would be necessary. The ET disagreed. It held that there was a relevant redundancy proposal that might affect potentially all KKC employees by 12 June, when the proposal was submitted. KKC was therefore obliged to start consultation in good time after 12 June. The ET held that this required consultation to be commenced “promptly” and that awaiting the government’s response was not a reason for delay. Further, although KKC did not know exactly who would be made redundant on 12 June, that did not permit it to delay consultation.
KKC appealed to the EAT. The EAT upheld the decision of the ET.
Comment
Employers should be alive to the fact that the obligation to consult on collective redundancies must be commenced promptly once there is a proposal to dismiss the relevant number of employees. The obligation to consult may be triggered before the particular employees who are at risk have been identified or confirmed. The EAT highlighted that the consultation process allows for the possibility that information will become available during the process.
Kerry Garcia