New ACAS Code on Collective Redundancies

May 7, 2013

As you may be aware, with effect from 6 April 2013, the law on collective redundancy consultation changed.  Employers were previously required to undertake collective consultation for a period of 90 days if more than 99 employees are to be made redundant at any one establishment, this has now been reduced to only 45 days.

To coincide with the change in law, ACAS has produced new guidance.  Although the guidance on collective redundancies does not have statutory force it is a useful summary of an employer’s legal obligations and provides some practical pointers on carrying out collective redundancy processes.  

The guidance contains a 10 point checklist for handling collective redundancies which HR law has summarised below:

1.  When does consultation start?
At least 30 days before the first dismissal if 20 – 99 employees are to be made redundant in one establishment within 90 days, and at least 45 days if the same applies to 100 or more employees.

It must be early enough for the consultation to be meaningful i.e. the proposals are not irreversible.  Whilst the guidance suggests that consultation could take place many months before any proposed redundancy is carried out, it could result in disruption, uncertainty and poor morale for an extended period of time.  

2.    What is meant by establishment?
This can be difficult to ascertain. The courts have stated that this is the unit to which workers are assigned to carry out their duties.  For example, earlier this year a Tribunal held that each of Woolworths’ 814 separate stores was an individual establishment and therefore collective consultation on their closure only needed to have taken place in those stores which employed more than 20 employees.  Conversely, some tribunals have previously adopted a broader definition of establishment when considering multi-site redundancies, and particularly where management decisions are made centrally.  

3.    How many employees are involved?
The guidance helpfully reminds employers that voluntary redundancies and redeployments are in included in the figure.  Likewise, employees on fixed term contracts which are proposed to be dismissed earlier than agreed, on the grounds of redundancy, are included in the figure.  However, employees whose fixed-terms contracts come to the end of their agreed duration are not included.   

4.    Who to consult?
The obligation is to consult with representatives of affected employees, rather than employees direct.  The relevant representatives are those of any recognised train union or, if no trade union is recognised, other elected employees. 

Employee representatives may be elected solely for the purpose of redundancy consultation, or they may be part of an existing consultative body - if the body has a broad enough remit to discuss redundancy issues.  

Further, as employees who are affected by the proposed redundancies may not be at risk of redundancy themselves (for example any employees who may have to take on additional duties), the representatives should also represent those employees.  

5.    What information should you provide?
The ACAS guidance reflects the minimum disclosure requirements set out at Section 188(4)(a) – (i) of the Trade Union and Labour Relations (Consolidation) Act 1992. 

6.    How should consultation be conducted?
ACAS suggests that best practice by an employer would be to produce a consultation pack, slides and Q&As for affected employees and their representatives.  ACAS also suggests training the manager(s) undertaking the consultation, prior to holding consultation meetings.

The consultation must include ways of avoiding the proposed dismissals and/or reducing the overall numbers.  The employer should also include how to mitigate the effect of the redundancies.  The consultation should be genuine and carried out with a view to reaching agreement.  ACAS suggests that being open about the reasons behind the proposed vacancies is more likely to produce creative solutions such as temporary lay-offs or reduced hours.

7.    How long should consultation last?
There is no set time and can be longer or shorter than the 30 or 45 days.  ACAS focuses consultation needing to be meaningful, and held in good faith, rather than lengthy.  ACAS suggests that a number of presentations and consultation meetings should be held.

8.    When do you carry out individual consolation?
Individual consultation should never take place before collective consultation has commenced. However, depending on the circumstances, they may run concurrently – for example if the employer has agreed with employee representatives on the number of redundancies and how they will be selected – but is still collectively consulting on the redundancy payment. 

9.    When does dismissal take effect?
If collective (and individual) consultation is genuinely complete, notice of termination may be given prior to the end of the 30 or 45 day period.  However, the dismissal itself cannot take effect until the 30 or 45 day period has expired. 

10.    What are the rights of redress?
Failure to comply with the requirements of collective consultation can lead to a complaint which can be brought by either an appropriate trade union representative or an elected employee representative body (unless there are no representatives, in which case by the affected employees themselves).

A Tribunal may compensate affected employees with a punitive “protective award”.  This will be an amount equivalent to every affected employee’s normal week’s pay throughout the “protected period”.  The default duration of the protected period will be 90 days – although a Tribunal may consider it “just and equitable” to reduce this period.  The payment is not subject to mitigation and this claim could be bought alongside a claim for unfair dismissal compensation and, as a protective award applies per affected employee, failing to comply with these collective consultation obligations can be a very costly error for an employer..    


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