Shanahan Engineering v Unite

The law requires employers to consult affected employees when making 20 or more redundant, unless there are “special circumstances” making it difficult to comply. The Employment Appeal Tribunal (EAT) has said in Shanahan Engineering v Unite that employers are not totally relieved from the obligations to consult even if they can show there are “special circumstances”.

Basic facts

Shanahan, an engineering construction contractor, won a contract in 2007 for work on a power station being built by Alstom. The contract gave the Alstom project manager the power to tell Shanahan to stop and start work at little or no notice.

By April 2008 Shanahan had about 145 craft employees on its books at the site. Given the short term nature of the work, it had agreed a redundancy procedure with Unite which was recognised by the company for these employees.

On 31 April Alstom told Shanahan that certain works would have to be rescheduled by close of business the following day. Shanahan’s operations manager then gave notice of redundancy to about 50 craft employees and terminated their employment with effect from 2 May, giving them a week’s pay in lieu of notice.

Unite claimed that the contractor was in breach of the collective consultation requirements under section 188 of the Trade Union and Labour Relations Consolidation Act (TULRCA). The company argued that it was not reasonably practicable to comply because of “special circumstances” as provided for under section 188(7).

Relevant law

Section 188(1) TULRCA says that employers must consult “appropriate representatives” if they propose to make 20 or more employees redundant. Section 188(2) states that when consulting, employers must consider ways of avoiding or reducing the number of dismissals and must also disclose certain information to the reps under section 188(4).

Section 188(7) states, however, that if there are “special circumstances” which mean it’s not reasonably practicable to do so, employers must “take all such steps ... as are reasonably practicable in those circumstances” in order to comply.

Section 189 states that tribunals can make a protective award if they decide a complaint is well-founded.

Tribunal decision

The tribunal said that although there were special circumstances that meant it was not reasonably practicable for Shanahan to comply with all the statutory requirements, there was no reason why the company could not have carried out some consultation.

It said: “ Consultation may be quite adequately completed within a matter of only a few days, depending on the circumstances and we see no reason why in this situation, this respondent could not have consulted with the Union representatives commencing on 1 May and continuing perhaps only for a very few days thereafter.”

It ordered 90 day protective awards for the employees.

EAT decision

And the EAT agreed with the tribunal that although there were special circumstances, it was still possible for Shanahan to comply with at least some of the consultation requirements under section 188 and consult over a few days.

However, it said that when assessing the seriousness of the failure to consult, tribunals should take into account both “the culpability of the employer and the harm or potential for harm of the default. The tribunal should take into account all the circumstances and make such award as is just and equitable”.

It therefore remitted the length of the protective award to the tribunal in the light of this guidance.