As an employer, making redundancies can be a stressful time-consuming exercise. When planning to make a large number of employees redundant, it is essential that the correct legal procedure is followed.
What is a Collective Redundancy?
If an employer is planning to: –
- make over 20 employees redundant
- in a single establishment
- during a period of 90 days
then this is known as a ‘collective redundancy.’ In such cases, there are set rules and procedures which must be followed by an employer. Individual consultation is always required, regardless of how many employees are being made redundant. However, where the number of redundancies exceeds 20, there is an additional requirement to consult collectively. In summary, this places an obligation on the employer to consult with the recognised trade union or an elected employee representative.
Notification to the Secretary of State
In a case of collective redundancies, there is a duty on the employer to notify the Secretary of State of its proposal to make redundant 20 or more employees during a 90-day period. This notification is done by completing form HR1 and the timescales for making the notification reflect the minimum consultation periods set out below. This is an important step for employers, as failure to do so is a criminal offence and can result in an unlimited fine being imposed.
When must the consultations be carried out?
The law requires collective consultations to be commenced in good time and no dismissals can be made until the consultation process is complete. The following consultation periods must be adhered to: –
- if 20 to 99 employees are to be made redundant: at least 30 days before the first dismissal takes effect; or
- if 100 or more employees are to be made redundant: at least 45 days before the first dismissal takes effect.
What information needs to be provided?
Before consulting with the trade union or elected employee representative, the employer must provide written information on the following: –
- the reasons for the proposals;
- the numbers and descriptions of employees it is proposing to dismiss as redundant;
- the total number of employees of any such description employed at the establishment in question;
- the way in which employees will be selected for redundancy;
- how the dismissals are to be carried out, taking account of any agreed procedure, including the period over which the dismissals are to take effect;
- the method of calculating the amount of redundancy payments to be made to those who are dismissed; and
- for agency workers: the number of agency workers, where they are working and the type of work they are doing.
Until the above information has been provided, the employer cannot commence the consultation process.
Consulting with the trade union or employee representative
Upon providing the above information, the employer can start their consultations with the trade union or elected representative. The aim of the consultations is to try and reach agreement on ways in which the dismissals can be avoided, reduced or mitigated. There is no rule which prevents individual consultations taking place alongside the collective consultations, but employers should not give employees notice of dismissal prior to the conclusion of the consultations.
Consequences of failure to comply
If an employer fails to follow the correct consultation procedure then they may be presented with tribunal proceedings. If the tribunal finds the complaint well founded, it will make a declaration to that effect and may make a protective award. A protective award requires employers to pay employees their normal week’s pay for a period of time called the ‘protected period’. The tribunal has the discretion in fixing this period but the maximum length of the protected period is 90 days in all cases where 20 or more employees are to be made redundant.
Where the employer has failed to consult individually, or where the individual feels they have been selected unfairly, then they may have a claim for unfair dismissal.