Check if you need to hold collective consultation
Redundancy is usually a type of dismissal when a role is no longer needed. Before you select anyone for redundancy, you should hold a consultation.
Consultation means discussing and coming to agreement with employees on how the redundancy process will be carried out.
Collective consultation is where you must consult on your redundancy plans with any recognised trade union, or if there is not one, employee representatives.
By law, you must hold collective consultation where all of the following apply:
- you're planning 20 or more redundancies (dismissals)
- the redundancies are in 1 establishment – not necessarily in your organisation as a whole, which may be much larger
- you plan to make the redundancies within 90 days
It’s still good practice to collectively consult even if the above do not apply to your situation.
You should also consult with employees individually.
What counts towards the number of redundancies
Collective consultation is based on the number of roles being made redundant, not necessarily the amount of people.
When counting how many roles could be made redundant, be aware that:
- voluntary redundancies are included, for example if you plan to make 22 employees redundant but 6 of them volunteer for redundancy, you must still collectively consult
- those you’re redeploying or moving to alternative roles are still included, for example if you plan to make 17 employees redundant and offer 5 employees alternative roles, the total number is more than 20 so you must still collectively consult
- anyone on a fixed-term contract that’s coming to the end of its agreed duration is not included
- if you've already started collective consultation on a separate redundancy situation, those already affected are not included
You should not stagger redundancies to avoid consultation. For example, by making several, smaller groups of staff redundant over a longer period of time.
If a claim is made to an employment tribunal, and the judge believes you staggered redundancies to avoid collective consultation, staff will be due compensation (a 'protective award').
Checking if it's a single establishment
Collective consultation applies when there are plans for at least 20 redundancies at a 'single establishment'.
A single establishment could be either an entire organisation, or a 'distinct entity' within an organisation. For example, it:
- manages its own workforce
- is reasonably permanent and stable
- can carry out the tasks it's assigned
- has its own technical means, equipment and organisational structure that allow it to carry out its function
An accountancy firm of 100 employees is suffering losses and needs to make big job cuts in the next month. The employer identifies 25 roles for redundancy.
Because they’re planning to make more than 20 redundancies in the same establishment within 90 days, they will need to hold collective consultation.
You should still consider collectively consulting staff even if you do not have to, as it helps to cover all options before making decisions.
If you’re thinking of making 20 or more redundancies but are not sure whether they’re in a single establishment, you should get legal advice.
If a case goes to an employment tribunal, the judge will consider whether the redundancies were in a single establishment.
Tell the government about collective redundancies
By law, you must inform the government’s Redundancy Payment Service (RPS) about your planned redundancies before you start collective consultation.
You could be fined if you do not notify the RPS.