Before an employer makes redundancies it must ensure that it first consults with its workforce collectively to consider ways to avoid redundancies, where redundancies cannot be avoided how to reduce the number of proposed redundancies and reducing the damage caused by redundancies.
Where an employer proposes to make 20 or more redundancies during a period of less than 90 days the consultation must include any employee’s representatives. A prudent employer will, in all circumstances, also consult with the individual employees concerned.
Employers must also, where 20 or more employees are going to be made redundant, notify the Department of Business Innovation and Skills (BIS) at least 30 days before the first redundancy or at least 90 days before where 100 or more employees are to be made redundant. Failure to provide the requisite notice is a crime and could result in a fine of up to £5,000.
Collective redundancy consultation
As part of the collective consultation, the employer should give an explanation as to why the redundancies are taking place. This will usually be an organisational reason such as the need for that employee to work is ceasing or is being reduced.
The consultation should include Trade Unions that are recognised by the employer even where the employee concerned is not a member of that trade union, provided the employee falls within one of the job categories that the trade union represents.
Where there is no trade union or the trade union does not cover the employee’s job category, the employees can either nominate a representative for the employer to consult with or give the employer authority to discuss the redundancies with a party that has represented the employees previously. Where employees elect representatives there is a duty on the employer to ensure that the election process is fair and in accordance with the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
The representative should be provided with the following information:
- Reason for the redundancy;
- The number of employees at risk of being dismissed;
- The job titles of those being dismissed;
- The number of employees of this description working for the employer;
- Methods of selection;
- The period over which the redundancies will take place;
- How the redundancy payment has been calculated; and
- Information about the employer’s use of agency workers.
Consultation should take place at least 30 days before the first redundancy where 20 to 99 employees are to be made redundant over a 90-day period or less and at least 90 days where 100 or more employees are to be made redundant over a 90-day period or less.
If an employer fails to comply with its consultation obligations its employees can make an application to an employment tribunal for a protective award, which is a penalty that entitles the employee to be paid a week’s wages for the protection period beginning on the earliest of the date of the first dismissal or the tribunal award (up to a maximum of 90 days).
Individual consultations with employees before making them redundant
Individual consultations should take place as soon as the employer has decided the selection criteria and the employer should ensure:
- The selection criteria is fair and objective;
- That employees have been warned and consulted about the redundancies;
- The union, where there is one, has been consulted; and
- That alternative jobs have been considered (and records of these jobs kept).
The consultation procedure should reflect the employee’s contract of employment or the procedure set out in any staff / company handbook. Where historically a particular procedure has been used, it should continue to be used provided that it is fair and reasonable.
The consultation should aim to generate feedback from employees about the proposed selection criteria which should then be amended where necessary. Each employee should also be provided with their scores and the details of how much they are to be paid, including a breakdown of how each one has been calculated. Notice of the redundancies should be given to the employees concerned after the consultation period. Where an employee is to be made redundant he or she should be given appropriate time off to look for alternative employment.
Failure to follow the correct procedure could result in the employee making a claim for unfair dismissal and / or discrimination in an employment tribunal. These claims can be avoided by keeping appropriate records of the consultation process – more advice for employers on redundancy here.
If in doubt about redundancy procedure or policies, employers should seek legal advice (we would be happy to assist) or speak to ACAS.
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