UK: Failure to inform and consult - maximum award not appropriate for technical breach over election of representatives, nor where urgency due to insolvency

The EAT has reduced an award for failure to inform and consult on a TUPE transfer from seven weeks' pay to three weeks' pay, where the employer had attempted to comply with its obligations but had rushed the election of representatives with whom to consult.

The 18 affected employees were given one afternoon to nominate and vote for candidates for two representatives. One of the affected employees was excluded from the process as it was his day off and the EAT ruled that the employer should have waited. There was also a tie between two candidates for the second representative position and the employer simply chose one of them (on the basis that it was the other's day off on the day of the consultation meeting). The EAT considered that the employer should have notified the employees of the tie and allowed them to decide how to resolve it, although it accepted that the employer was not acting out of malice and was simply seeking a practical solution.

Although the breaches compromised the fairness of the election, they were only technical in nature and the actual consultation was satisfactory. Awards should reflect the seriousness of the employer's default and in this case two to three weeks' pay was appropriate. (Shields Automotive v Langdon)

The maximum award will also be inappropriate if compliance with the required consultation period would have meant the employer trading while insolvent. The EAT in AEI Cables Ltd v GMB reduced the award for failure to consult over mass redundancies to 60 days' pay despite there being a complete failure to inform and consult, to reflect the threat of insolvency and personal liability attaching to the directors. However this was still a substantial award and emphasises the importance of carrying out as much collective consultation as possible, even in a dire financial situation.