The EAT has held that Keeping Kids Company (“KKC”) (the official name for the now-disgraced “Kids Company” charity) could not rely on events which occurred after 20+ redundancy dismissals were proposed as a defence to a claim for failing to inform and consult.

KKC was a charity that assisted disadvantaged children. After running into financial difficulty, KKC made an application to the government for a grant in June 2015.  The application included a business plan for restructuring the company which envisaged that either over 50% of the roles within KKC may be removed (but with no specific roles identified) or the company would need to go into insolvency.  Although government funding was subsequently provided, it was withdrawn shortly afterwards due to safeguarding concerns, which mean that KKC had to close and all its employees were dismissed.

Several employees brought claims against KKC for protective awards for failure to inform and consult over collective redundancies.  KKC argued that there were “special circumstances” because the subsequent withdrawal of the government funding meant it was not possible to conduct collective consultation. The Tribunal concluded, by a majority, that at the time KKC made the grant application (if not before), there was a proposal to dismiss and collective consultation should have started on that date. The obligation to consult in good time meant that consultations had to begin promptly, and it did not matter that KKC were unclear at that time as to who would be made redundant.  The Tribunal held that there was no “special circumstance” to excuse the failure to consult. KKC appealed to the EAT.

The EAT dismissed the appeal and held that the Tribunal was entitled to conclude that the obligation to consult arose in June 2015, as the business plan allowed for only two outcomes: immediate insolvency or large-scale redundancies, where over half of the staff were dismissed. The funding application was no reason to delay the consultation process, and KKC could not claim that they did not have sufficient information to engage in meaningful consultation until the response to their application had been received.  However, the EAT did find that the occurrence of the safeguarding investigation was relevant to the amount of the protective award to be made to the employees.

Comment

This decision serves as a reminder to all employers of the trigger point for collective consultation, namely, clear intent to dismiss at least 20 employees, even if those at risk have not yet been identified. The “special circumstances” defence is extremely limited and is rare in its application.

• Share this blog

• Twitter
• Facebook
• Linkedin