Redundancy consultation and procedure
The right to be collectively consulted applies when an employer proposes to make 20 or more employees redundant at one establishment over a period of 90 days or less. Employers should also consult individual employees, as a Tribunal may find it unfair if employers only consult unions and not individuals.
Employers may wish to take legal advice over the one establishment criteria before deciding on what consultation plans they intend to follow due to recent case law, unless they intend to count all of their sites as a single establishment. It is good practice in any collective redundancy situation for employers to work with trade union or workplace representatives to mutually agree commencement and duration of the consultation procedure.
Employers are required to consult with the 'appropriate representatives' of any of the employees who may be affected (directly or indirectly) by the proposed dismissals or by any measures taken in connection with those dismissals.
Consultation must be undertaken by the employer with a view to reaching agreement with appropriate representatives on issues such as ways of avoiding dismissals or reducing the number of employee to be dismissed. This duty applies even when the employees to be made redundant are volunteers. Failure to comply with the consultation requirements could lead to a claim for compensation, known as a protective award.
Consultation should begin in good time and must begin:
- at least 30 days before the first dismissal takes effect if 20 to 99 employees are to be made redundant at one establishment over a period of 90 days or less
- at least 45 days before the first dismissal takes effect if 100 or more employees are to be made redundant at one establishment over a period of 90 days or less.
As good practice employers may wish to consider establishing a formal redundancy procedure which should be negotiated and agreed with trade union or employee representatives. Full and effective consultation when drawing up a redundancy procedure will do much to allay unjustified fears, avoid the suspicion that redundancies are imminent and allow representatives to contribute their views and ideas. This procedure could be incorporated into the company handbook to ensure all employees are aware of it. Failure to follow a reasonable procedure could lead to employees making claims of unfair dismissal.
Depending on the size and nature of the company, the contents of a formal procedure on redundancy would normally contain the following elements:
- an introductory statement of intent towards maintaining job security, wherever practicable
- details of the consultation arrangements with trade union's or employee representatives
- the measures for minimising or avoiding compulsory redundancies
- general guidance on the selection criteria
- details of the severance terms
- details of any relocation expenses, details of any hardship or appeals procedures
- policy on helping redundant employees obtain training or search for alternative work.
Measures for minimising or avoiding compulsory redundancies may include:
- natural wastage
- restrictions on recruitment
- reduction of overtime
- seeking applicants for voluntary redundancy.
What information must an employer disclose about proposed redundancies?
To ensure employee representatives can play a useful part in the consultation process over proposed redundancies your employer must disclose certain information in writing including:
- reasons for the proposed redundancies
- numbers and descriptions of employees affected
- proposed method of selecting the employees who may be dismissed
- proposed method of carrying out the dismissals, taking account of any agreed procedure, including the period over which the dismissals are to take effect
- how redundancy payments, other than the legal minimum, will be calculated.