Shanahan has a contract to build generators. It built up its onsite workforce to meet the deadline but there were health and safety concerns. The client had the right to tell them to stop or not start any work, and vice versa, at any time. The client eventually decided that the only way forward is to deal with the two generators sequentially rather than together and tell Shanahan to get the numbers on site sorted by close of business two days later.

Shanahan always knew the work would wind down over time and that people would be redundant. They had an agreement in place with Unite on this very point - all the elements you would want and expect. But it hadn't planned for this. Time was short and the clock was ticking.

Rather than consulting at all, Shanahan decided that it would select those to go but base the selection on the criteria agreed with the Union. It then notified the individuals, who got paid in lieu, reduced its on site workforce and got on with the job as directed. Then Unite sued - 50 people had been dismissed, there was no 30-day collective consultation (as required by S188 TULRCA), there was no excuse and the Employment Tribunal (ET) was asked to make an award for the standard 90 days' pay for each person.

Shanahan argued the case on three points. First - the client had an absolute right to require them to stop the work and do it differently. The result is that Shanahan had no control over what was needed and when. It had no other work for the people concerned. Second - if the client had absolute power then this fell within s188(7) - these were special circumstances that meant it was not reasonably practicable in the circumstances to do what was expected under S188 so any failure was excused and it should not be liable. Finally - and this is the money element - the award for failure to consult is 90 days pay. Even if it was liable the ET ought to reduce that to take into account the circumstances of the case and make a nominal award.

Sadly the ET did not agree with the reasoning. It accepted the client had given little notice but that's life. The short notice was accepted by the ET as enough to let Shanahan off the hook for the full 30 days consultation, but that was not the same as justifying no consultation at all. The ET felt it could have done something - even something short - but doing nothing at all was not acceptable. It might not have lasted 30 days - but even in these circumstances it could have taken such "steps towards compliance ...as are reasonably practicable in those circumstances".

Sure enough, having found against it on this crucial point, the ET saw no reason to award anything less than the 90 days' pay that is the default position under the Act. No discount for the circumstances - if you are non-compliant and something could have been done then the full award is made. This is a penal regime.

Shanahan appealed hoping to get the decision thrown out completely. That has not happened but it has made some progress. In the Employment Appeal Tribunal (EAT), the Judge was less harsh. His decision is that:

Clearly there was a redundancy driven by the change of approach by the client. Such things happen, especially as businesses sign contracts that allow clients to do it. Clearly Shanahan had to react. Clearly there were special circumstances which made 30 days consultation unworkable (as the ET had accepted) but, as the ET had decided, this wasn't sufficient to avoid the obligation at all. So the EAT agreed with the ET to this point. The EAT was more supportive in terms of the award that had been made. Although 90 days' pay is the starting point for all awards it is not mandatory - the ET could have discounted it but decided there was no reason to do so. The EAT concluded that the ET's own findings identified evidence to support the argument for reduction of the award but for whatever reason had then ignored it. For that reason the ET has been asked to have another go, look at the evidence and, if it remains unconvinced of the need to discount the award, it must say why. Overall not a great result but Shanahan live to fight another day on the size of the award. A strong hint in the EAT decision - that some consultation could have taken place over a short period - does not mean that an award of only a week's money is likely but the ET needs to take a broader view.

Wragge & Co's experts provide some action points to consider in light of this judgement.