This article explains the law on collective redundancies.
What is a collective redundancy?
A collective redundancy is the situation where 20 or more employees from the same business are to be dismissed within a 90-day period. Collective redundancy usually happens when a business needs to restructure in order to stem losses. Because the scale of dismissal is large, special rules apply.
An employer is only able to carry out collective redundancies after completing the consultation procedure. The employees who are to be dismissed should not be notified before.
Notification to the Secretary of State
Section 193 (1) and (2) of the Trade Union and Labour Relations (Consolidation) Act 1992 provide that notice must given to the Secretary of State at least 90 days before proposing to dismiss as redundant 100 or more employees at one establishment within a period of 90 days.
The same applies with a limit of 30 days for between 20 and 99 employees before giving notice to terminate employees' contracts of employment.
The date of notice is the date the notification is received by the Department for Business, Innovation and Skills. Failure to notify can lead to legal proceedings and on conviction up to a fine of £5,000.
Who to consult
If the employees are members of a trade union that is independent and recognised to conduct collective bargaining, union representatives must be consulted on behalf of the employees. There is no obligation on the employer to consult other representatives in these circumstances.
In a non-unionised workforce, appropriate, existing representatives (such as members of a works council or staff forum) or employee representatives who were specifically elected to deal with consultation on the proposed redundancies must be consulted.
If employees, having a genuine opportunity to do so, fail to elect representatives, the employer may provide information to the employees directly on an individual basis.
The employer should also consult the individuals who may be selected for redundancy.
What should an employer consult on?
You should think of the consultation process as a "view to reaching agreement". It allows the employer and the employees to discuss ways of avoiding the dismissals (such as reducing pay or the number of working hours), reducing the numbers to be dismissed and mitigating the consequences of the dismissals (both to the business and to employees).
Employers should not give staff notice of dismissal prior to the conclusion of consultations, as this might be taken as an indication that the consultations are merely a procedural requirement.
What information must be disclosed before redundancy consultations?
The employer must disclose in writing the following information about the proposed redundancies:
- the reasons
- the numbers and descriptions of staff at risk
- the total number of employees of those descriptions employed at the establishment
- the method of selecting employees for redundancy
- the time period over which dismissals will be made and how dismissal will be carried out
- how any redundancy payments will be calculated
The consultation process in practice
Consultation must take place 30 or 90 days before the redundancy notices take effect and before decisions to make redundancies have been made.
There is no statutory time for how long the consultation period should last – it is likely to vary depending on the size or the organisation and the number of proposed redundancies.
What happens if an employer fails to follow the correct procedure?
Employees who have been affected may bring a complaint before an employment tribunal within three months of the last of the dismissals. If the tribunal finds the complaint well-founded, it will make a declaration to that effect and may make a protective award.
The award requires the employer to pay the employees remuneration for a protected period, which begins on the date when the first of the dismissals to which the complaint relates took place, and ends up to 90 days later. If an employer fails to consult on an individual basis, an affected employee may bring a complaint of unfair dismissal.
You can read more about redundancy in general in this article. Related to the subject, you may also be interested in the topics of dismissal and unfair dismissal.