Collective Redundancy Consultation

Carillion Services Limited (in compulsory liquidation) & ors v Benson & ors

In collective redundancy situations employers are obliged to follow certain prescribed procedures when proposing to make at least 20 or more employees redundant at one establishment within a period of 90 days.

Employers in these circumstances often query whether there are any exceptions to this rule, particularly if the business is in great difficulty or if there is particular commercial sensitivity about announcing the redundancies.

Under the Act that governs this area (the Trade Union and Labour Relations Consolidation Act 1992) there is potentially an opt out where there are “special circumstances” which render informing and consulting “not reasonably practicable” for the employer to comply with the consultation requirements.  

On the facts of this case, Carillion was in severe financial difficulties.  Carillion thought that it could secure lending, however in a very short period of time, over a weekend, the company’s financial stakeholders did not approve lending arrangements in the absence of Government guarantees.  This resulted in Carillion going into liquidation the following day. Carillion argued that given its expectations that it would have financial support, the failure to get lending was a sudden intervening event and therefore justified special circumstances, which meant it was not reasonably practicable for it to have complied with the consultation periods under the Act.

The Employment Appeal Tribunal (EAT) rejected that argument.  Whilst there can be situations in insolvency which could justify the special circumstances defence, this will depend on the individual facts of any case.  The Tribunal had to decide whether the circumstances relied upon are uncommon or out of the ordinary.  It is not enough that the circumstances are merely “unforeseen”.  It effectively found that it did not accept the company’s argument that the failure to secure lending was unforeseen.  On the facts clearly it found the lending problem could have been anticipated, that such a scenario was not out of the ordinary and so the company could have complied with the consultation regulations.


The case really affirms for employers in the motor industry in dealing with collective redundancy that it is going to be a very rare circumstance indeed in which failure to comply with the collective redundancy regulations (if they apply) will be excused under the “special circumstances” defence.