Home News Business Law Carillion Group Insolvency Triggers Guideline Worker Consultation Ruling

Carillion Group Insolvency Triggers Guideline Worker Consultation Ruling

There may be ‘special circumstances’ that excuse an employer from full compliance with worker consultation requirements before making mass redundancies – but what exactly does that mean? The Employment Appeal Tribunal (EAT) considered that issue in a case arising from the compulsory liquidation of the Carillion group.

The multinational construction and business services group employed about 18,000 UK workers when it entered liquidation in January 2018. The insolvency process was described as the largest and most complex of its kind in UK history. About 1,000 of those employees who were made redundant launched Employment Tribunal (ET) proceedings, seeking protective awards on the basis that the group had failed to comply with the consultation requirements enshrined in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).

The group conceded that there was a failure to consult workers’ representatives. It contended, however, that there were special circumstances, within the meaning of Section 188(7) of TULRCA, that meant that it was only required to take all such steps towards compliance as were reasonably practicable.

It asserted that it was presented with a sudden and unforeseen disaster over the weekend preceding its entry into liquidation. Although it had been confident of survival, the group’s nadir came after the government refused financial help or to support an administration process. When key stakeholders in turn declined to approve short-term lending arrangements, compulsory liquidation became the only option. From that point onwards, mass redundancies were inevitable.

Following a preliminary hearing, however, the ET found that those circumstances were not special, in the sense of being uncommon or out of the ordinary, and that there had been no sudden intervening events over the crucial weekend. The group had been in decline since at least July 2017 and there was no evidence that the government was in the habit of providing support to businesses in the group’s position. Lenders had, prior to the weekend, indicated that any further support from them was conditional on support from the government.

In dismissing the group’s challenge to that ruling, the EAT could find no flaw in the ET’s conclusions. The ET directed itself correctly in law and, having found that there were no special circumstances, it was not obliged to go on to consider whether the group had done all that was reasonably practicable to comply with its consultation duty.

The EAT noted that the obligation to consult workers’ representatives includes a requirement to provide information on a wide range of matters, including the reasons for proposed redundancies, the method of carrying out dismissals and the method of calculating redundancy payments. Even if dismissals could not be avoided, such information would be highly valuable to employees facing the distressing prospect of redundancy.

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Published
14 October 2021
Last Updated
2 November 2021