Employment law- Collective redundancies
What is a collective redundancy?
If an employer is proposing to make redundant 20 or more employees at “one establishment” (see below) within 90 days, this will amount to a collective redundancy. If this is the case, then legal requirements regarding consultation will apply.
The proposed dismissal in a collective redundancy situation will specifically not be about an individual’s performance or conduct. This means it will cover standard redundancy situations such as downsizing or site closures.
What are the requirements for collective redundancy?
The law broadly requires a business to consult with either a recognised trade union or elected employee representatives in good time, namely 30 days before the first dismissal if there are 20-99 proposed redundancies, and 45 days if 100 or more redundancies are proposed (although this does not obviate the need for individual consultation as well). No dismissals should take effect until consultation is complete and the minimum notice above has been given. If this does happen, then you could be entitled to a “protective award” (see below).
If an employer embarks on consultation after having given notice, this will not comply with the legislation.
An employer must automatically consult with a recognised trade union if there is one, even in respect of those employees who are not union members. If there is no recognised union, then an employer must consult with any existing group of employee representatives (such a settlement agreement staff forum), and if no such group exists, the employer must arrange for representatives of the affected employees to be elected in accordance with rules set out in the legislation.
The obligation to consult is also in respect of all affected employees, even if not everyone is put at risk. This is because the proposals will result in changes to the wider workforce including allocation and volume of work.
Collective consultations must cover the following from the start of the process:
- the total number and description of proposed redundancies;
- the proposed selection method;
- the proposed procedure and time limits for carrying out the redundancies;
- if there is any way to avoid the redundancies;
- the reason for the proposed redundancies;
- how to keep the numbers to a minimum;
- the calculation of any enhanced redundancy payments;
- how to limit the effects for employees involved.
Notification of the Secretary of State
An employer must also disclose in writing to the appropriate representatives certain information concerning the proposed dismissal, and notify the Secretary of State for Business Innovation and Skills 30 or 45 days (depending on the number of dismissals) before the first dismissal takes effect.
How can consultation limit the redundancy effects for employees?
A trade union or employee representative could argue on behalf of affected employees that they are prepared to work shorter hours, take a salary cut or forgo bonuses in an attempt to avoid the propose redundancies being made. Other ways may include voluntary redundancies, staff retraining, early retirement, a recruitment freeze, and cutting back on agency or other temporary workers and contractors.
What does “one establishment” mean?
One of the most important issues in the redundancy exercise is – what amounts to “one establishment” where the redundancies are taking place? The courts have ruled that an “establishment” should only refer to each individual office or store (the latest ruling on this being in April 2015).
Remedies for an employer’s failure to consult
The remedy for breach of the collective consultation rules is a “protective award” of up to 90 days’ pay for each affected employee, which is an effective and penalising remedy against the employer. The claim must be brought by the recognised trade union or employee representatives if they are in place, otherwise the claim can be brought by each individual affected employee.
A claim must be presented to an Employment Tribunal within the period of three months less one day of the date on which the last of the dismissals takes effect.
An employer has a defence to such a claim where it can show that there were special circumstances which meant consultation was not reasonably practicable, although this is not an easy defence to raise.