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Collective redundancy consultations

The Trade Union and Labour Relations (Consolidation) Act 1992 provides that where 20 or more employees are being consulted about redundancy “at one establishment” they are entitled to be collectively consulted and we have set out the collective redundancy procedure below.

In a significant recent case which looked at the collective redundancy of Woolworths’ employees, the Employment Appeal Tribunal (EAT) has overturned an employment tribunal’s decision that the employees, who worked in stores where fewer than 20 employees were employed, were not entitled to be consulted collectively.

In fact, the EAT found that the provision that the employees be “at one establishment” should be disregarded for the purposes of any collective redundancy involving 20 or more employees.  The effect of this is that businesses will now have to collectively consult with employee representatives once they reach the 20 employee threshold, regardless of the location of the proposed dismissals.

When does the duty to consult collectively arise?

• The duty to consult arises where a business is proposing to dismiss as redundant 20 or more employees within a period of 90 days or less,
even if the employees are based at different locations within the business.

• The obligation to consult operates, in effect, as a moratorium on the proposed dismissals, whereby the dismissals cannot take effect for a minimum period of time once consultation has started.

Who to inform and consult

• The business has a duty to inform and consult with appropriate representatives of the affected employees.  It must also notify the Department for Business, Innovation and Skills and failure to do so is a criminal offence.

• Where any of the affected employees is a member of a recognised trade union, the trade union must be consulted.  In other cases, the business may consult with representatives directly elected by the affected employees or with an appropriate standing body of representatives elected or appointed for some other purpose.

• Where elected representatives are required, specific statutory rules exist governing the election and adequacy of representation produced by that election.

The consultation process

• The consultation must begin in good time.  Certain minimum time periods apply depending on the scale of the redundancies proposed.  For fewer than 100 redundancies the consultation period is 30 days.  For more than 100 it is 45 days.

• Consultation begins with the provision of information on the proposals to representatives.  As a minimum, consultation must be undertaken with a view to reaching agreement on:

   • ways and means of avoiding the dismissals;

   • reducing the numbers of dismissals; and

   • mitigating the consequences of any dismissals.

Penalties for breaching the duty to consult

• A failure to comply with any of the rules on information or consultation, or on the election of representatives, can lead to a protective award being made by an employment tribunal.  The maximum protective award is up to 90 days’ gross pay for each affected employee.  The award is not based on loss of earnings, but on the seriousness of the employer’s default.