In E Ivor Hughes Educational Foundation v Morris and others UKEAT/0023/15, the EAT upheld a tribunal’s decision to make a 90 day protective award in circumstances where no consultation had been undertaken because the employer was unaware of its legal obligation to consult. The EAT held that the duty to consult was triggered when the employer made a provisional decision to close the workplace. The EAT also agreed that there were no special circumstances rendering it not reasonably practicable to comply with the consultation requirements.
The case concerned the closure of the Peterborough and St Margaret’s School, operated by E Ivor Hughes Educational Foundation (the Foundation). The number of pupils at the school was declining and the projected figures for the following academic year indicated that there would be a sizeable deficit.
At a meeting of the school governors in February 2013, the projected numbers were discussed. The head teacher put forward potential solutions to save costs but, ultimately, it was accepted that if the pupil numbers did not increase then the school would need to close. On 25 April 2013, the head teacher confirmed the pupil numbers for the following year and they were worse than expected. The decision was made to close the school at the end of the summer term.
Staff were entitled to one term’s notice. The governors gave staff notice of dismissal on 29 April, with the notice expiring on 31 August. If they had waited until the following month to give notice then the contracts would have expired in December 2013. No consultation took place with staff and it appeared that the governors had no knowledge of their legal obligations. The employees brought claims for a failure to consult and for unfair dismissal.
Employment tribunal decision
The employment tribunal (ET) held that the duty to consult collectively had been triggered at the February meeting, when the governors had decided that the school would be closed unless pupil numbers improved. The Foundation submitted that there were special circumstances rendering it not reasonably practicable to consult with staff. They argued that they could not tell the staff of the proposals because if this information was leaked to parents, then they may have taken pupils out of the school, making the situation worse. Their second argument was that, if the governors gave notice of dismissal after the end of April, then the staff would be entitled to a further term’s notice expiring in December 2013.
The ET rejected both these arguments, holding that there were no special circumstances in either February or April. Contractual obligations (in this case the employees’ notice period) were not capable of amounting to special circumstances. The ET concluded that there were no mitigating factors and, as no consultation whatsoever had taken place, it ordered a maximum 90 day protective award for each of the employees. The Foundation appealed to the Employment Appeal Tribunal (EAT).
The EAT dismissed the appeal in relation to the failure to consult and the amount of the protective award but remitted the case to the ET in relation to a procedural point arising on the unfair dismissal claim.
The EAT considered an unresolved question on when the duty to consult is triggered: is it an employer proposing a strategic decision that will foreseeably or inevitably lead to redundancies or when that decision has been made and redundancies are a consequence? The EAT noted that, on either analysis, the duty to consult arose in February and it did not find it necessary to decide which test applied.
The EAT rejected the Foundation’s argument regarding special circumstances, describing this line of argument as “artificial”. The arguments put forward were hypothetical and not points that were considered at the time. Therefore, no matter what they were, they could not constitute special circumstances. The reality was that the governors had not even considered consulting with staff because they did not appear to know that they were obliged to do so.
The Foundation also appealed in relation to the size of the protective award. The EAT rejected its argument that there were mitigating circumstances. A protective award is primarily intended to be punitive towards the employer, rather than compensatory towards the employee. Whilst the EAT acknowledged that the governors’ decision not to consult was clearly not deliberate, their ignorance of the law arose from a “reckless failure” to seek legal advice. Accordingly, it upheld the decision to apply the maximum protective award.
This case acts as a useful reminder to employers to seek legal advice at the earliest opportunity when contemplating redundancies. The decision to order the maximum protective award may seem harsh in circumstances where the employer was unaware of its legal obligation to consult but, in law, ignorance is no defence. It is plain that both the tribunal and the EAT took a dim view of the governors’ failure to take appropriate legal advice. This decision is also a helpful reminder of the scope of the special circumstances exception and how protective awards are quantified.