20 August 2010
A recent case before the Employment Appeal Tribunal (EAT) dealt with a situation that is quite common in the construction industry, whereby problems encountered on site require adjustments to the working and staffing arrangements in order to adapt to the change in circumstances (Shanahan Engineering Ltd. v Unite the Union).
Shanahan Engineering Ltd. won a contract to build two steam generators for a power station being constructed by Alstom. The plan was to construct the generators simultaneously. By the beginning of April 2008, Shanahan was employing 145 workers at the site. Unite the Union was recognised by the company in respect of its employees and, as the short-term nature of the work made it inevitable that redundancies would arise at the end of the contract, Shanahan and the union had reached prior agreement as to the selection process to be used in this event. No redundancies were anticipated at that stage, however.
By the end of April 2008, the situation had changed. There were problems with the site and a decision was made to construct the generators one at a time. Alstom gave instructions to Shanahan to reschedule the works with immediate effect. Shanahan decided that 50 or so workers would have to be made redundant and selected them in accordance with the agreed method. Their employment was terminated with effect from 2 May 2008 with a week's pay in lieu of notice.
The redundant employees contended that Shanahan was in breach of its duty under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) by failing to consult when proposing to make more than 20 employees redundant, and accordingly claimed for the payment of protective awards. Shanahan argued that there were special circumstances in this case which meant that it was not reasonably practicable to comply with the statutory requirement.
The Employment Tribunal (ET) was satisfied that the events were such as to relieve Shanahan of its duty to commence consultation at least 30 days before the dismissals took effect. However, it saw no justification for failing to carry out such consultation as was reasonably practicable in the circumstances. There is no requirement under TULRCA that the consultation must last 30 days. As there was an agreed selection procedure already in place, it was unlikely that the consultation process would have taken more than a few days. The ET was satisfied that the failure to consult was a serious failure and awarded the maximum 90-day protective award to the redundant employees.
Shanahan appealed against the ET's decision. The EAT upheld the ET's finding as regards the employer's failure to consult. Even though there were special circumstances in this case, this did not relieve Shanahan of its duty to consult its employees, with a view to reaching agreement regarding the redundancies, and it remained reasonably practicable to do so in the time available.
As regards the level of the protective award, however, the EAT did not agree with the ET's finding that there were no mitigating factors that would justify setting the award for any lesser period and remitted the case to the ET for reconsideration on this point.
James Townsend, partner in the employment law team, says, "Employers who find themselves in a situation where it is not reasonably practicable to commence consultation according to the timescale laid down in TULRCA are advised that there remains an obligation to do so in whatever time is available. We can advise you to ensure the actions you take minimise the risk of claims for failing to consult."
For legal advice on your employment law matter please call a member of the team on 01753 279029, complete the online enquiry form or email employmentlaw@bpcollins.co.uk. |
