The news of how P&O recently treated its staff – by dismissing them as redundant without any consultation – has put in the minds of many employees what the correct procedure might be when making people redundant.
When is collective consultation required?
The statutory duty to carry out collective consultation is triggered when an employer proposes to make 20 or more employees redundant within a 90-day period at a single establishment. Employers need to bear in mind the 90-day period is a rolling period and could include redundancies which have already been made. The duty is also triggered when proposing to dismiss employees and reengage on new terms and conditions – “fire and rehire”, a practice currently under scrutiny. Employers also need to consider the meaning of “single establishment”, which has been the subject of case law. This can pose difficulties for employers who operate large sites with different teams being managed independently – a joined up approach is required where one establishment is carrying out redundancies.
How long must collective consultation last?
Consultation begins once certain specified information is given to employee representatives and must continue for a minimum period before any dismissals take effect. The minimum period depends on the number of proposed redundancies:
- 45 days where 100 or more redundancies are proposed
- 30 days where 20 or more redundancies are proposed
When planning redundancies, employers will need to build this time after the election of representatives into their redundancy planning to ensure that they carry out consultation for the minimum period.
How to plan for collective consultation
- Employers will need to look at whether they have a recognised trade union or employee representatives already elected for collective consultations. If not, employers will need to plan for an election which must comply with statutory rules.
- Consider the business as a whole – large businesses may have redundancies happening regularly, which could trip them into collective consultation if they’re not carefully managed. Alternatively, plans may be drawn up to ensure that the number of proposed redundancies is kept below the requirement for collective consultation. Employers should note that, in some cases, the expiry of fixed-term contracts could count when considering whether the duty to collective consult is triggered.
- Employers must notify the Department for Business, Energy and Industrial Strategy (BEIS), using form HR1, either 30 days before the first dismissal takes effect (20 or more redundancies) or 45 days before the first dismissal takes effect (100 or more redundancies). This is a key step and a legal requirement for employers carrying out collective redundancies.
- Employers must ensure they also carry out individual consultation to ensure that any redundancy dismissals are fair and do not risk claims from employees.
What are the risks of not carrying out collective consultation?
Breach of the collective consultation obligations carries the sanction of a “protective award” of up to 90 days’ gross pay for each affected employee.
Failure to carry out consultation with employees can also risk claims of unfair dismissal – compensation for which could be up to a year’s pay per employee.
Employers who fail to notify BEIS will be committing a criminal offence, which carries a potential fine of up to £5,000.
Given the risks of getting it wrong and the importance of planning, employers should take advice early where they are considering making 20 or more people redundant.