Both as a matter of good industrial relations practice and in order to avoid possible liability for unfair dismissal, an employer that is contemplating redundancies should give its workforce as much warning as possible that jobs may be lost.
The company should also consult with the employees who may be affected by the proposed redundancies about the reasons for the proposals and how the company intends to implement them. This could be done either directly with the employees or with their representative (collective consultation). Care should be taken to ensure that employees who are on maternity leave or long-term sick leave are also warned and consulted about the proposals. A failure to do so could lead to claims of sex or disability discrimination as well as unfair dismissal. Where fewer than 20 redundancies are contemplated, the statutory minimum dismissal procedure (writing, meeting, appeal) must be followed in respect of each dismissal.
This section makes frequent reference to the need for companies to consult when implementing redundancies. It is therefore worth noting how the courts and tribunals that enforce employment law interpret the meaning of consultation. They assume that, in order to consult meaningfully on a proposal, an employer must:
- enter into the consultation process with an open mind on whether its proposal might need to be revised;
- provide clear information on what is being proposed and why;
- give employees adequate time to consider that information and to prepare their response;
- give proper consideration to employees' responses, and take them into account in finalising the proposal.
Consultation is therefore a two-way process, involving a considered exchange of views between employer and workforce, rather than a one-way process of informing the workforce of what is going to happen.
Because consultation and warning are central to fair redundancy dismissals, a company that fails to consult and warn is very likely to find itself liable for unfair dismissal. Furthermore, a redundancy dismissal will be automatically unfair if the redundancy is one of fewer than 20 and the company has not met the requirements of the statutory dismissal procedure. That procedure also involves consultation: the company must at the very least inform the employee about the grounds on which the company is considering making him or her redundant and hold a meeting to discuss it.
If a company recognises a trade union, then it should consult with the union about any proposed redundancies, however small the number, both as a matter of good industrial relations practice and in order to avoid liability for unfair dismissal. There may be an existing collective agreement between the company and the union setting out how the consultation process should be conducted, and how disputes over the implementation of redundancies should be resolved. Some companies may, for example, observe the engineering industry's national agreements for the avoidance of disputes in relation to manual workers and staff grades. Where the company does not recognise a trade union but does have some other means of consulting its workforce collectively, such as a works council or staff committee, it could use those channels for consultation.
If a company is planning large-scale redundancies, then the Trade Union and Labour Relations (Consolidation) Act 1992 imposes a specific duty on the company to consult on its proposals with either its recognised trade union or with employee representatives. Where an employer is proposing collective redundancies or 20 or more employees at the same establishment over a period of 90 days or less, then the employer should consult any appropriate trade union or other employee representatives. The employer should consult "in good time" and at least 30 days in advance of the first dismissals. In the case of larger scale redundancies of 100 or more employees at the same establishment within 90 days then the employer should begin consultation "in good time" and at least 90 days before the first of the dismissals. The circumstances in which this duty applies are broadly defined, to cover any situation where a company is proposing to dismiss employees for a reason that does not relate to the particular individuals concerned. It would therefore cover not only redundancy proposals but also proposals to terminate employees' existing contracts in order to introduce new terms and conditions of employment (clean break approach ).
This specific obligation to consult is triggered if the company is proposing to dismiss 20 or more employees at any one establishment within a period of 90 days or less. When calculating the number of employees affected by the proposal, no account need be taken of employees with fixed-term contracts of three months or less or recruited to do a specific task that is not expected to last more than three months, unless in either case the employees have in fact been employed for more than three months.
It should be stressed that even if the specific obligation to consult under the 1992 Act does not apply because, for example only 19 redundancies are proposed, it is still advisable for a company to consult with any recognised trade union or any other existing employee representatives. This would be both as a matter of good industrial relations practice and in order to avoid liability for unfair dismissal.
Unfortunately, in setting a threshold of 20 or more employees at one establishment, the legislation does not define what 'establishment' means. In some cases, it may be synonymous with 'workplace' or local employment unit, but in other cases it may not. For example, where several sites are closely linked by administration and management structures, they may all count as one establishment, and the proposed redundancies at all the sites will need to be aggregated to establish whether this specific obligation to consult applies.
As a matter of good employment practice and in order to fulfil any specific legal obligation to consult on large-scale redundancies, a company should consult with all the employees who may be affected by the proposed redundancies. This includes not only those who may be dismissed but also those who may be required to move or to take on different or additional work because of the redundancies.
Where the specific obligation to consult applies, if the employees who are affected are covered by collective bargaining, the company must consult with the trade union's representatives. If the affected employees are not covered by collective bargaining, the company has two options:
- To consult representatives that the employees have already appointed or elected for some purpose not specifically related to redundancies. The company can take up this option only if it is clear from the context in which the representatives were appointed or elected that they have authority to be consulted about redundancies on the employees' behalf. For example, someone appointed to a committee to organise social events is unlikely to have the relevant authority, but someone appointed to a staff committee or a works council set up to discuss major issues affecting the business may have.
- The other option is for the company to consult with representatives who have been expressly elected by the affected employees for the purpose of consultation on redundancies. If the company takes this route, it will need to build time for the holding of the election into its timetable for implementing the redundancies. The company must also ensure that the election meets the requirements set down in the legislation. For example, there must be sufficient representatives to represent the interests of all the affected employees, who must also be entitled to vote. If no candidate comes forward for election within a reasonable period, then the company must provide each affected employee with the information about redundancies that it would have given to their elected representatives (content of the consultation ).
Further details on holding elections for employee representatives are discussed elsewhere in this Guide (election requirements ). Companies can also obtain guidance on holding elections for employee representatives by contacting their Association.
Consultation needs to begin early enough for the input of employees or their representatives to be capable of affecting the result. The specific duty to consult on large-scale redundancies requires consultation to begin 'in good time'. It also lays down minimum consultation periods. If the company is proposing to dismiss 100 or more employees as redundant at one establishment within 90 days or less, then consultation must begin at least 90 days before the first of the dismissals takes effect. If the proposal by the company is for 20 to 99 dismissals at one establishment within 90 days or less, then consultation must begin at least 30 days before the first of the dismissals takes effect. The consultation period will only begin to run once the employer has supplied in writing the required information to the appropriate representatives. If the company has invited employees to elect representatives early enough for it to meet the 30- or 90-day period but the election is not held promptly, it is sufficient if the company consults as soon as is reasonably practicable after the election has taken place.
Employees who are at risk of redundancy may decide to leave during the 30- or 90-day consultation period, perhaps because they have volunteered for redundancy or find alternative employment. This does not mean that the company has failed to respect the consultation period, but it is nevertheless advisable for the company to discuss the possibility of early leavers with the union's officials or employee representatives.
If the specific duty to consult on large-scale redundancies applies, the employer must provide certain information to the employee representatives, ensure that certain issues are covered in the consultation process and approach the consultation with the aim of reaching agreement. Companies that are proposing smaller-scale redundancies might find these requirements a useful starting point when planning their own consultation with employees or their representatives.
Where the specific duty to consult applies, the company must give the appropriate representatives the following information, in writing:
- The reasons for the proposals.
- The numbers and descriptions of the employees the company proposes to dismiss.
- The total number of employees of that description employed at the establishment in question.
- The way in which the company proposes to select the employees who are to be made redundant.
- The proposed method and timing of the dismissals (covering, for example, whether the company intends to dismiss with notice or with a payment in lieu).
- The proposed method of calculating redundancy payments, if the company intends to improve upon the payments provided for in the statutory scheme.
- A copy of the form the company has sent to the Department for Business, Enterprise and Regulatory Reform, notifying it of the proposed redundancies (Form HR1) (notifying BERR).
In its consultations, the company must discuss with the representatives possible ways of avoiding the dismissals altogether or of reducing the numbers to be dismissed. It must also discuss whether there is any way of minimising the impact of the dismissals. This could cover, for example, whether the company is able to offer employees career counselling or retraining. Although the legislation does not expressly require this, the company should consult on the specific issues contained in the information it has supplied to the employee representatives, such as redundancy selection criteria. This would also ensure that the company was acting reasonably for the purposes of unfair dismissal law.
During consultation on large-scale redundancies, the company must allow the representatives access to the affected employees, and give them whatever other reasonable facilities and accommodation may be appropriate to enable them to carry out their role effectively. Depending on the size and resources of the company, this might include, for example, the use of a telephone, photocopier and word processor.
There is no obligation on the company to obtain the representatives' agreement to its proposals. Nevertheless, if large-scale redundancies are proposed, the company must enter into the process with the aim of reaching agreement with them. It is, therefore, advisable for the company to keep a record of the meetings that have been held and the content of the discussions, and to ensure that no announcements are made that indicate that an irreversible decision to implement the redundancies has already been made before the end of consultation.
Notices dismissing employees for redundancy should not be sent out until the consultation has been completed. In the case of large-scale redundancies, this could be earlier than the 30- or 90-day period set down by the legislation, provided agreement has been reached on the company's proposals or it is clear that no further meaningful discussion is likely. It is possible that employees who are at risk of redundancy will leave before the consultation period has ended, through volunteering for redundancy or obtaining another job. This does not mean that the company has not observed the consultation period, but it would nevertheless be advisable for it to discuss the possibility of early leavers with the employee representatives.
If there are special circumstances that make it not reasonably practicable for a company to comply with its specific duty to consult on large-scale redundancies, it must still do what it can to comply. For example, if the redundancies have been precipitated by the unexpected and sudden loss of its only customer, the company may not be able to consult for the usual 30- or 90-day minimum period. However, it may still be possible for the company to keep the employee representatives informed about the situation and hold an emergency meeting to obtain their views. The fact that the decision that gave rise to the redundancies was made by the employer's parent company, which failed to pass that information on to the employer, does not amount to special circumstances justifying a failure to consult.
The representatives involved in collective consultation on large-scale redundancies are entitled to reasonable paid time off during working hours in order to perform their functions and to undergo relevant training. Employees are also entitled to reasonable paid time off to stand for election as representatives.
It is unlawful for a company to treat an employee unfavourably, dismiss an employee or select an employee for redundancy on the grounds that the employee has carried out his or her role as a representative. This protection also extends to employees who stand as candidates for election or participate in an election. It applies regardless of the employee's age or length of service with the company.