If an employer is proposing to make 20 or more employees redundant within 90 days at one establishment, it is likely that it will need to consult any employees affected by the proposals on a collective basis. Below are some top tips (which reflect the latest legal developments) for employers engaging in collective consultation.
Collective consultation obligations may also arise on a business transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (as amended) or where employers are planning to make substantial changes to terms and conditions of employment and harmonise them amongst employees. Consultation obligations may also arise under the Information and Consultation of Employees Regulations 2004 or where an organisation is required to set up and consult with its European Works Council. These top tips will focus on collective consultation obligations in the context of redundancies only.
• Draw up a timetable working backwards from the proposed dates of termination of employment so that you can calculate when the collective consultation should commence. You need to consult at least 30 days before giving notice of the redundancies where you propose to make 20 or more employees redundant within a 90 day period, and at least 90 days beforehand where you plan to make 100 or more employees redundant within that timescale. Employers will risk protective awards (of up to 90 days’ uncapped pay) being made against them where they issue individual notices to terminate before the collective consultation process has been completed.
• Consultation should be held with a view to reaching an agreement, but it is not necessary that agreement is actually reached provided that the consultation process is genuine and does not appear to be a ‘sham’. It should cover whether and how the redundancies can be avoided or reduced, how much redundancy pay the affected employees will receive and best practice would dictate that the redundancy selection criteria should also be consulted upon. Even if employees can be redeployed then the obligations will still apply if you are proposing to withdraw the employee’s existing employment contract or if you are proposing substantial changes to it so that the original contract will effectively be withdrawn. These employees should be included in the count of 20.
• Even if some employees agree to take voluntary redundancy, this will not accelerate the process. You are still required legally to consult on a collective basis even if you achieve the full headcount reduction by way of volunteers.
• Collective consultation is only necessary if the employees being made redundant all work at the same establishment. There is no specific guidance in the legislation as to what amounts to an establishment, but case law has developed to confirm that it could be a branch office, a business unit or various building sites run out of one base. Consider where the employees are based, who they report to and their duties before you reach any conclusions on whether or not they are all at the same establishment.
• If the redundant employees are employed by 2 different subsidiary companies of the same parent then each company must propose to make more than 20 redundancies for the collective consultation obligations to apply, even if both companies are based at the same establishment.
• A possible way of avoiding the collective consultation obligations is to make staff redundant in groups of less than 20 employees within each 90 day period. However, a tribunal would not look favourably if it was evident that your intention was to deliberately avoid collective consultation.
• Collective consultation should take place with Trade Union representatives or with properly elected employee representatives if there is no Trade Union presence. Consultation may take place with both where only part of the workforce is unionised.
• And finally… don’t forget that individual consultation obligations also arise (after collective consultation has taken place) where an employee is being made redundant in order to make any dismissal for redundancy fair.