If your organisation has to make more than 20 people redundant, the Secretary of State must be notified of this intention. Failure to do so without justification may result in prosecution and/or a fine for the company or any of its officers. Advance notification of the redundancies is made using the HR1 Form.
If you are dismissing fewer than twenty employees by way of redundancy within a single workplace, advance notification does not need to be given to the Secretary of State, although other statutory requirements will apply to the redundancy process.
Advanced notification of redundancies: Guidance for Employers
If you plan to dismiss twenty or more employees within a single workplace, then you are required by law to notify the Insolvency Service’s Redundancy Payments Service of potential redundancies in any 90-day period.
If your company has more than one site, then each one is treated separately for notification and consultation purposes. If you have previously notified the Redundancy Payments Service (RPS) of one round of redundancy and need to make further redundancies, you should treat them as separate events. You cannot merge or conflate them into one, although you do not need to add the two groups together in order to calculate the minimum period for either group.
The notification requirement is part of the wider redundancy process, which must be fair and lawful to avoid tribunal complaints. The redundancy procedure should comprise the following stages:
- The grounds for redundancy should relate to business reasons, and whether certain roles have become economically viable or not. Employers should consider the role when making a decision about redundancy, and not the person performing it.
- You will need to identify the ‘pool’ of employees whose jobs are potentially at risk of redundancy who perform similar types of work within the business. It is essential, if you are to avoid any claim for unfair selection for redundancy, that you make all employees within that group ‘at risk’.
- From this group (or ‘pool’), individual employees may be selected for redundancy. If there is only one person performing a particular role, then you have what is known as a ‘pool of one.’
- Inform affected employees by writing to them stating their position is at risk of redundancy. You should also state in the letter that this is the start of the consultation period. It is at this stage you can see whether any employees are willing to agree to voluntary redundancy.
- The next stage is to conduct the consultation meetings. If you have selected more than one employee you will need to hold a minimum of three meetings to ensure fair selection criteria have been adopted and to identify who should be made redundant.
- Always use the consultancy period to consider alternatives to redundancy, this includes considering alternative roles within your business that may be suitable for any employees at risk. Minimum periods for notification and consultation differ regarding the number of employees affected:
- For between 20 – 99 redundancies at one site – the minimum period is 30 days before the first dismissal; and
- For more than 100 redundancies at one site – the minimum period is 45 days before the first dismissal
Therefore, to comply with the redundancy requirements, you must notify the Redundancy Payments Service either 30 or 45 days before you issue any redundancy notices or before the first dismissal. Notification must be made in the correct format which is known as an ‘advanced notification of redundancies’ commonly referred to and made on an HR1 Form or Form HR1.
What is the HR1 form?
The HR1 form is a redundancy notification which must be completed when an employer proposes making twenty or more employees redundant.
It is used to inform the Redundancy Payments Service of potential redundancies within your business.
If you do not provide the required information, you are breaking the law. In 2015, three directors of City Link were charged with criminal offences arising from the collapse of the business with the loss of over 3,000 jobs. In the same year, charges were also brought against the Chief Executive of Sports Direct, Dave Forsey, in relation to the collapse of its subsidiary business, USC. Forsey was charged with failing to notify the relevant authorities of the business’s plans to lay off 200 warehouse staff.
HR1 form and the redundancy process
An employer must consult with their employees when they are thinking about making redundancies within a business. This is called a ‘consultation period.’ The method differs with the number of staff you employ and there are no set rules if there are fewer than twenty redundancies.
If you have twenty or more proposed redundancies within a 90-day period on one single site, then you must follow the ‘collective consultation’ rules. It must begin in ‘good time’ and must begin either 30 or 45 days before the first dismissal takes effect.
Any voluntary redundancies are included in the total, if you propose to make, say twenty-three employees redundant and six of them volunteer, you must still consult.
If you fail to consult, then any redundancies that take place will almost certainly be unfair and you could find yourself or your company in an employment tribunal.
It is not mandatory for a consultation to end in agreement but it must be entered into with a view to reaching one, this includes discussions as to how to avoid or reduce redundancies or any way to redeploy staff within another department or on another site.
The first step is to notify RPS in form HR1 before the consultation starts.
If there are any elected employee representatives or trade union representatives then you should consult with them. Alternatively, if there are neither of these, then you should consult with your employees directly.
Information about the proposed redundancies should be given to the representatives or employees giving them sufficient time for consideration and reply.
If there are any requests for further information, then this should be provided as soon as possible.
You should now give affected employees termination notices showing an agreed date for leaving which must be after the expiration of the 30/45 days’ notice period. You must also include individual employees’ notice periods as contained within their contracts.
As a minimum, you should give the statutory notice period, which is:
- One week’s’ notice for one month’s continuous service up to two years; and
- One week’s notice for each year of continuous employment for two years or more, up to a maximum of 12 weeks.
Once the consultation is complete you can issue redundancy notices.
If you cannot comply with the minimum 30/45-day notification period, you must provide RPS with reasons for any failure. The employer can be fined an unlimited amount if you do not notify RPS.
The minimum period you must provide before you can make any employees redundant are the same as for collective consultation:
- 20 – 99 proposed redundancies: 30 days’ notice required
- 100 + proposed redundancies: 45 days’ notice required
You need to provide representatives or employees with written details of:
- Reasons for redundancy
- Categories of employees and the number of employees at risk
- Details of the selection process
- How redundancies will be carried out
- Calculation of redundancy payments, since most employees with two years’ continuous service are entitled to a redundancy payment
In any consultation process, the requirement is for this stage to be ‘meaningful’ and share all necessary information to support the progress of the consultation.
The law does not state how long a consultation should last, its length will vary depending on the business’s circumstances. There is also no set period for consultation to end and it can go beyond prescribed minimum notice periods.
How to complete Form HR1
You must complete all sections of the form HR1. If any information is missing, the form will be rejected.
The form should include the employer’s name and address, telephone, email etc, contact details (if different), details of the site where the redundancies are to take place, timing of the redundancy (date of first and last proposed dismissal) and where you have not given the requisite 30/45 day notice, reasons for not being able to comply with the statutory requirements.
You must also set out your method for redundancy selection, staff numbers, occupational grouping (e.g.: clerical, manual, managerial, etc), the total number of employees within a particular group together with the number of possible redundancies. For example, you may have 27 manual workers but only five of those positions are at risk.
The form asks you to provide your SIC code, which stands for Standard Industrial Classification of Economic Activities which lists codes that provide a description of your company’s nature of business for Companies House. You should also detail the exact nature of the business on the form.
You will be asked to confirm whether or not you intend to close the business, for example, due to insolvency.
Set out your reasons for the redundancies, e.g. lower demand for products or services, or insolvency.
If you have consulted with a trade union then you will have to provide the details of the organisation, the name of their representative(s), and give a description of employee(s) they represent.
You must state if there are any groups of employees for which you do not recognise trade unions.
You will need to confirm whether you have given individual employees notice of dismissal or not.
Finally, you must complete a declaration to certify that the information within form HR1 is correct and complete, so far as you know it to be.
The completed HR1 form must be returned via email to HR1@insolvency.gov.uk.
You must notify RPS at least 30/45 days before the first dismissal and before you issue an employee with a notice of dismissal. The notification date is the date on which RPS receives the completed HR1 form.
You must also provide a completed copy of the HR1 form to all the appropriate representatives.
HR1 Form FAQs
What is a HR1 form used for?
A HR1 form is used to notify the Secretary of State via the Insolvency Service’s Redundancy Payments Service (RPS) in advance that an employer is proposing to make twenty or more employees redundant.
How long does a HR1 form last?
RPS is of the view that form HR1 expires on the date the last redundancy dismissal will take place, as stated on the form. However, in practice redundancy can take a lot longer than initially anticipated at the time the HR1 form was submitted, this is because collective consultation can take some time to complete and therefore, take place later than anticipated on the HR1 form.
Is there a legal requirement to complete and submit a new HR1 form?
It is not clear on what basis the insolvency service are saying the HR1 form expires and a new form must be submitted. It is suggested if this situation arises you should obtain further guidance and clarification from RPS.
What are the stages of redundancy?
There are five stages to the redundancy process: Establish reasons for redundancy; identify roles ‘at risk’ of redundancy; inform employees at risk; start redundancy consultation meetings; and consider alternatives to redundancy.
How long does the redundancy process take to deal with?
It really depends on how many employees' jobs are at risk. Generally speaking, the fewer roles at risk, the quicker the process. For example, if only one person is affected the whole process can be over in as little as two weeks. The duration of consultation and the number of associated meetings necessary can differ from case-to-case depending on a number of supplementary factors.
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.