Redundancies can be a confusing process for many employers as there are specific legal requirements that must be followed, especially large-scale redundancies. If approached poorly, redundancies can lead to legal difficulties.
This blog will outline how to address a collective redundancy and what the employer’s obligations are. On a general basis, redundancy should always be a fair, honest and transparent process. Employers should consider employees suggestions and thoughts with an open mind, doing so can greatly reduce any legal risks. Not only that but following a well thought out and fair process will ensure you keep your most talented employees whilst reducing your long-term costs.
What are collective redundancies?
In the event that you are intending to make 20 or more people redundant from one establishment within a 90-day period then you must follow additional collective consultation rules.
Collective redundancies normally happen when a business needs to restructure or because the business is closing, because of the large scale of employees involved there are specific rules to follow.
Before the consultation process starts, Section 193 (1) and (2) of the Trade Union and Labour Relations (Consolidation) Act 1992 provides that an employer must inform the Government’s Redundancy Payment Service in advance, where the intention is to make more than 20 people redundant.
Consultation process; Timings
There are also particular timing obligations for collective consultancy;
- You must begin consultation at least 30 days before giving the first redundancy notice where there are less than 100 employees at risk.
- Where there are more than 100 employees at risk, you must begin consultation at least 45 days before giving the first redundancy notice.
There is no statutory time limit for how long the consultation period should last, it is likely to vary depending on the size of the organisation and the number of proposed redundancies but they must comply with the statutory minimum as set out above.
Who do employers consult with?
As an employer, if the employees are members of a trade union then the trade union representative must be consulted on behalf of the employees. Where there is no union the employees will have to elect employee representatives, who employers will consult with during the course of the consultation.
If employees, having a genuine opportunity to do so, fail to elect representatives, the employer may provide information to the employees directly on an individual basis.
The consultations; what should you discuss?
Consultation meetings should be thought of as a process to reach an agreement. The employer and employees should discuss ways to avoid redundancies by suggesting alternative work or changing hours or pay.
Employers should not go into a consultation process having already decided on redundancy dismissals. The meetings should be an opportunity for discussion and should be approached with an open mind.
Employers should not give staff notice of dismissal prior to the conclusion of consultations, as this might be taken as an indication that the consultations are merely a procedural requirement.
The information that an employer should provide during the consultations includes;
- The reasons for the redundancy
- The method that will be used to select the employees for redundancy
- The number of employees that are to be made redundant
- Information regarding the redundancy pay and how it will be calculated.
- The likely time period of the redundancy process and what employees should expect.
What will happen if employers fail to consult or conduct a fair redundancy
Failure to comply with the statutory requirements of collective consultation may result in fines and Tribunal claims for a protective award for each employee (this applies regardless of the length of service and is up to a value of 90 days’ pay per employee.)
The employees who have been affected can bring a claim for unfair dismissal and/ or protective award with 3 months from the effective date of termination.
Our MD Jodie Hill has done some videos on her Youtube Channel providing information on redundancy when the employee is shielding and redundancy involving pregnant employees or employees on maternity leave. Jodie has also done a video highlighting ways to cut staff costs and how to avoid redundancies where possible as redundancies should be the last resort.
For further advice and guidance to ensure you get the redundancy process right from the start to avoid legal difficulties, we can work with you as your HR Business Partner. We’ll be there to give you peace of mind and give you support when you need it. Our HR packages offer flexibility so that we can be there for a one-off HR or employment law issue or we can work closely with you offering on-going support when needed. This includes unlimited use of our 24/7 helpline for any employment law or HR issues which may arise. For more information click here to watch a video.
If you have any enquiries please send an email to firstname.lastname@example.org.
Disclaimer: Please note that this blog does not amount to legal advice, please send us an email to be advised on your matter.
Written by Deborah Norbury