Collective Consultation (Redundancy Guide)

    Collective consultation

    IN THIS ARTICLE

    Consultation with any affected employees is a requirement in any redundancy situation, but where an employer is considering collective redundancies, a collective consultation exercise may also be required. Failure to comply with the legal requirements for collective redundancies can be a costly error and may also adversely affect employee morale and the business’ reputation in the public sphere.

    What is collective consultation in redundancy?

    Collective consultation is a discussion process between an employer and representatives of any employees who will be affected by a potential redundancy exercise. The aim is to provide information to the employee representatives about the proposed redundancies and for the parties to discuss possible alternatives to redundancy or ways of mitigating the effects of the redundancies. Collective consultation can take place in a face-to-face meeting or virtually, but it is advisable to ensure that whatever forum is used, the parties are able to enter into a discussion.

    Collective consultation does not replace the need for individual consultation, that is consultation between an employer and the individual employees who will be affected by the redundancy exercise. How collective consultation and individual consultation are undertaken will depend on the circumstances. For example, in some cases an employer will undertake a collective consultation exercise and then move onto individual consultation, whereas in other cases, it may be necessary to begin individual consultation before the collective consultation is completed.

    When does collective consultation apply?

    The requirement for collective consultation applies where an employer is considering making at least 20 employees at one establishment redundant within a 90-day period. Anyone who takes voluntary redundancy and any employee who has agreed to move into a new job or role as part of the redundancy exercise should be counted but employees who are on fixed-term contracts do not need to be included in the numbers unless their fixed-term contract is to end early as a result of the redundancy exercise.

    For these purposes, ‘redundancy’ can mean a typical redundancy situation where an employer has to let staff go, perhaps for financial or other business reasons. However, it also means redundancies due to the transfer of the business (TUPE) and where an employer terminates the contracts of employment of certain staff members in order to vary their terms of employment.

    Careful thought needs to be given as to the meaning of ‘one establishment’, which can, depending for example, on the nature of the employees’ work, actually mean more than one premises. Legal advice may need to be taken here.

    Where a collective consultation is already taking place at a workplace in respect of another redundancy exercise, those affected do not need to be included in the collective consultation for a different redundancy process. However, employers must not arrange the various redundancy exercises so as to minimise or avoid their collective consultation obligations.

    What are employee representatives?

    Who constitutes the employee representatives will depend on the circumstances.

    Where an employer recognises a trade union, collective consultation must be between the employer and the trade union’s representatives.

    Where no trade union is recognised, but employee representatives are already in place who have the remit to consult in a collective redundancy situation, consultation must be with those employee representatives.

    Where no trade union is recognised and there are no employee representatives already in place, new employee representatives will need to be elected.

    An employer will need to factor any need to elect employee representatives into the consultation timetable as consultation cannot begin until the representatives are in place. There are also rules setting out how such elections can take place and these should be followed by employers.

    Any affected employee can choose to stand as an employee representative and vote for other representatives, but it is the employer who determines the number of employee representatives required. This will depend on the number and spread of affected employees; all of their interests should be represented.

    If there are no trade union or employee representatives in place, and nobody wishes to stand for election as an employee representative, the employer should consult directly with the employees, although this is only to be used as a final resort.

    Who is an ‘affected’ employee?

    Any employee who will be affected by the redundancy exercise is an affected employee. As a result, although those employees at actual risk of redundancy will be affected, other employers not at risk may also be affected. For example, where redundancies are being made within a finance department, administration or HR staff may be affected if they are expected to take on additional duties. Bear in mind any affected employees who are on maternity leave as they must also be involved with the collective consultation.

    When should collective consultations start?

    Collective consultation should begin at least:

    • 30 days prior to any dismissal where the employer proposes to make between 20 and 99 employees redundant; and
    • 45 days prior to any dismissal where the employer proposes to make at least 100 employees redundant.

    If the redundancy situation arises in connection with a business transfer, the consultation process can be started prior to the actual transfer but the decision as to which employees are to be made redundant cannot be taken until the transfer has taken place.

    There is some discrepancy between the UK rules, which provide that collective consultation should begin once redundancy is proposed and the European position (from which the UK rules derive), which provides that redundancies only need to be contemplated to require the commencement of consultation. Practically, an employer should begin the process once it is clear that redundancies may be a serious option.

    How long should the collective consultation phase last?

    There is no prescribed period for the length of the collective consultation process provided that no dismissals are made within the minimum time period as set out above or during the consultation period. The consultation must be complete before any dismissals can take effect.

    Gauging the length of time required for consultation can be difficult. It is important to allow sufficient time for employee representatives to be elected (if required) and for meaningful consultation to take place; the employer and the employee representatives must be able to properly consider and discuss the proposals and alternative options and suggestions. That said, discussing the proposals too far in advance can result in uncertainty and anxiety for the affected employees, as well as affecting staff morale and the atmosphere in the workplace.

    What is the collective redundancy process?

    The various stages of a collective consultation process can be summarised as follows:

    Redundancy Payments Service (RPS)

    The RPS works on behalf of the Secretary of State for the Department for Business, Energy and Industrial Strategy. Prior to beginning the consultation process, the employer must notify the RPS using the form HR1. Where 20 to 99 redundancies are proposed, notification must be made at least 30 days before the first dismissal and where 100 or more redundancies are proposed, notification must be made at least 45 days before the first dismissal. Failure to notify is a criminal offence and can result in an unlimited fine.

    Appointment of employee< representatives (if required)

    If employee representatives need to be appointed, the process should be begun as soon as possible as consultation cannot begin until they are in place.

    Collective consultation

    The consultation process begins, and employers should provide the employee representatives with certain information about the proposed redundancies and allow them time to consider it.

    (RPS) Information requests

    The employee representatives may ask for additional information or clarification of certain areas and this should be provided where possible.

    Termination notices

    Those employees who are being made redundant should be provided with termination notices setting out their termination date. Minimum statutory notice periods need to be complied with or a payment in lieu of notice can be made if they are not to work their full notice period.

    Information to provide to employee representatives

    An employer must provide certain information to the employee representatives at the start of the consultation period. This is to ensure that they are fully aware of the situation and proposals, and can carefully consider them, before discussions begin.

    The information to be provided must include:

    • why the redundancies are being proposed;
    • the number and description of employees who could be made redundant;
    • the total number of employees who fall within that description;
    • the selection criteria, that is, how an employer will determine which employees are to be made redundant;
    • the redundancy process, including timeline;
    • the calculations to be used for redundancy payments; and
    • agency workers, such as how many there are, the work that they do and where they work.

    Determining what information can and should be circulated to the employee representatives can be a difficult decision for employers, particularly if business or other confidential matters could be disclosed. Sufficient information needs to be given to allow proper consideration of the position and alternative options, but the information provided should not be so lengthy or complex that a specialist or legal advisor is needed to decipher it. If the requisite information is not provided, the consultation could be deemed to be invalid and at the very least, is likely to sour relations between the employer and both the employee representatives and employees themselves.

    Some workplaces may have an information and consultation agreement in place with their employees or employee representatives. If so, ensure that the consultation procedure complies with its provisions.

    What should happen at a collective redundancy meeting?

    Although there is no requirement for collective consultation to result in agreement, it must be carried out “with a view to reaching agreement”. Proper discussion must take place considering the reasons for the redundancies, alternative options to avoid the need for redundancies, ways by which the number of redundancies can be reduced and possibilities for mitigating the effects of redundancy, for example, training options.

    Employers must allow enough time for a proper consultation to take place so that those involved can listen to and consider any suggestions. Employers are not required to accept the suggestions of the employee representatives, but they must be able to explain their reasons for non-acceptance and these reasons must be genuine. Under no circumstances should employers begin the collective consultation process with a final procedure in place.

    It is advisable to have someone trained in consultation and redundancy to lead, or at least be involved with, the collective consultation process from the employer’s side. Difficult conversations may be needed, emotions can run high and employers need to be careful what is said during the consultations; it is easy to agree to terms in order to move things on without having fully considered them or their consequences. Time can, and should, be taken to think about any suggestions made by the employee representatives; a knee-jerk response should not be given.

    Employers should also be clear as to the proposals in order that they can be easily explained to the employee representatives. That said, employers must also be open to change if the consultation is to be valid. All discussions and considerations should be documented in writing and kept as a record of what was agreed and why.

    The price of getting redundancy consultations wrong

    If an employer does not follow the correct collective consultation process or fails to consult at all, the trade union, employee representatives or employees themselves may take the matter to an employment tribunal which can make a protective award of up to 90 days’ gross pay for each employee.

    In addition, an employee could bring an unfair dismissal claim and potentially other employment-related claims, such as discrimination, in respect of the redundancy itself.

    When is collective consultation not required?

    There are an extremely limited number of ‘special circumstances’ which can be used by way of defence if an employer does not comply with the consultation requirements. Such circumstances are not listed or defined, and it appears they will only be accepted by an employment tribunal in truly exceptional situations. As a result, they should not be relied on as a potential defence without specific legal advice.

    Collective Consultation FAQs

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    Legal disclaimer

    The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.

    Author

    Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.

    Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.

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