Ask the Lawyer: Collective Redundancies

posted by KeithDaniel

As the Coronavirus pandemic continues to have a devastating impact on businesses across the UK, many employers are having to make large-scale redundancies. In this article we consider some frequently asked questions regarding large scale redundancies.

What is a collective redundancy?

A collective redundancy is when an employer proposes to make 20 or more employees redundant within 90 days.

What are the consultation requirements?

If 20 or more employees are to be dismissed at one establishment within 90 days, consultation must begin at least 30 days before the first dismissal takes effect. If the number of employees to be dismissed exceeds 99, consultation must begin at least 45 days before the first dismissal takes effect.

The 30 or 45 day period is not a minimum consultation period but relates to the time that must elapse before the first dismissal takes effect.

Whenever there is a collective redundancy situation, to avoid claims of unfair dismissal, there will still be a need for individual as well as collective consultation, so the two processes will often run in parallel and may sometimes overlap.

Who should the employer consult with?

Employees

Employers should consult all affected employees, including those who may not be dismissed but nevertheless are affected by measures associated with the redundancies. For example, those who may have new working hours, changes to their contracts of employment or different reporting lines.

Trade Union Representatives

Employers also need to consult trade union representatives where the affected employees fall within a category for which that Union is recognised. 

Contrary to the mistaken belief, employees do not necessarily need to be union members for the union to consult on their behalf. 

Employee Representatives

Where a trade union is not recognised in respect of the affected employees, employers may choose to consult with an already established employee representative body (provided it adequately represents the affected employees), or alternatively, it may appoint representatives specifically for the redundancy consultation.

Employers should take legal advice to ensure the process for appointing representatives is fair. It should also be noted that the 30/45 day periods do not commence until employee representatives have been appointed, which can take a few weeks.

What information should be given during consultation?

The statutory consultation period will not be deemed to have commenced until representatives receive information on:

  • the reason for the proposed dismissals;
  • the numbers and descriptions of potentially redundant employees;
  • the total number of employees of such description employed at the establishment;
  • the proposed selection method;
  • the proposed method of dismissing (taking into account any agreed procedures);
  • the proposed calculation of redundancy payments;
  • information about the employer’s use of agency workers. 

If employers do not provide the correct information at the start, the consultation period may need to be extended.

What are the consequences for failing to consult properly?

An employment tribunal claim may be brought against an employer by either the employee representatives, trade union or individual employee (who can bring a claim is dependent on the circumstances). 

The maximum sanction for breaching the obligations is a "protective award" of up to 90 days' gross actual pay for each affected employee. This can be a considerable amount. 

An employer may also face claims for unfair dismissal if the redundancy process is not handled fairly. If collective consultation is carried out properly, the risk of a successful unfair dismissal claim will be reduced.

Do all redundancies have to be notified to the Secretary of State?

Where a collective redundancy is taking place, an employer has a duty to notify the Secretary of State on form HR1. Notification must be received by the Secretary of State at least 45 days before the first dismissal, where the employer proposes to dismiss 100 or more employees within a 90-day period. Where less than 100 redundancies are proposed, the notification period is 30 days. Failure to notify the Secretary of State is a criminal offence and an employer may be fined.

Can employees serve their notice whilst on furlough?

Yes, employees who have received confirmation that they will be made redundant can serve their notice period whilst on a period of furlough leave, allowing the employer to continue to claim reimbursement under the scheme, subject to the employer topping up the furlough salary to the pre-furlough pay.

If you are considering dovetailing the phasing out of the furlough scheme with a redundancy exercise, you need to start thinking about consultation requirements. The last dates for starting collective redundancy consultation and lodging form HR1 will be 16th September 2020 (if proposing over 100 redundancies) and 1st October 2020 (if proposing 20-99 redundancies).

Even if there are less than 20 redundancies proposed and the collective consultation rules do not bite, many organisations may decide to use the furlough period to bear the brunt of salary costs during the consultation and/or notice period.

If you are an employer who needs advice regarding redundancies or an employee who may be facing redundancy, please contact us on 029 2034 5511 or employment@berrysmith.com.