Collective Redundancies [Video]Posted in : Back to Basics on 2 June 2016
What is a collective redundancy? It describes the scenario where an employer proposes to make large scale redundancies, of 20 or more employees at one establishment, within a period of 90 days or less. Collective redundancy obligations are complex and I would strongly recommend that you take specific legal advice, at the earliest possible stage.
The cost of getting it wrong can be significant. This could include unfair dismissal awards for the employees, along with the potential for protective awards, which I discuss a little later on.
When a collective redundancy situation arises, the duty is to inform and consult appropriate representatives of the affected employees. This could mean a recognised trade union or representatives elected by the affected employees.
So who are the affected employees? Well, "affected employees" simply means those affected by the proposed dismissals or by the measures proposed to be taken in connection with the dismissals. This means a consultation may need to take place with employees that are not going to be made redundant.
Looking at consultation, when must consultation begin? Collective consultation obligations are triggered when an employer is proposing to dismiss, as redundant, 20 or more employees at one establishment, within a 90 day period. What "establishment" means, was the subject of some high profile litigation in recent years. It has now been clarified that it means the local unit or entity to which workers are assigned to carry out their duties.
What does "proposing to dismiss" mean? Again, this has been the subject of a lot of litigation. The latest position is that a consultation should begin when proposals are at a formative stage. That means that no decision should yet have been taken that roles will be made redundant.
The 90 day period is one to watch. Employers sometimes find themselves having to make redundancies in successive batches. So for example, 10 redundancies could be made in January and in early March the employer finds that it needs to consider a further 15 redundancies.
The obligation to collectively consult may have been triggered in relation to those 15 employees. Consultation should also start at a stage which allows for adequate time to allow meaningful consultation to take place. There is a statutory minimum period.
Where 100 or more redundancies are proposed, consultation must begin at least 90 days before the dismissal takes effect. This is different from the position in GB where the period has been reduced to 45 days. Where there are less than 100 redundancies proposed, the minimum period is 30 days.
So who must you consult with? If the employer recognises a trade union and the affected employees are represented by that union, consultation is likely to take place with the authorised officials from the union.
If the employer does not recognise a trade union or the affected employees work in a part of the company that is not represented by a recognised trade union, then the employer should make arrangements for the employees to elect representatives, who will then take part in the consultation.
The employer must make sure that an appropriate election is held in time, to allow the consultation process to be properly carried out. The rules around the elections are detailed and include things like the employer making the arrangements that are necessary to ensure that the election is fair.
Any employee affected by the proposed redundancy can stand for election, and the employer must determine the number of representatives to be elected to represent the interests of all of the affected employees. All affected employees, on the date of the election, are entitled to vote for the employee representatives.
As far as reasonably practicable, the voting should be carried out in secret and the votes should be accurately counted. A breach of the rules governing the election of representatives can lead to protective awards, which I discuss shortly.
Employee representatives have the right to reasonable paid time off for their representative duties. What is considered reasonable will depend on the circumstances. If an employee representative is dismissed or suffers a detriment for standing for election, or acting as a representative, they can make a claim to the tribunal.
So what does consultation involve? At the onset, the aim of the consultation must be with a view to reaching agreement on ways and means of avoiding, or reducing, the numbers of redundancies. While it is not necessary for employers and employees to actually agree-, reach agreement, there must be some form of negotiation rather than just an exchange of competing views.
So the first stage of consultation involves giving representatives written information, including details of the proposed redundancies. As a minimum, they should be giving the reasons for the proposed redundancies, the numbers and descriptions of employees it is proposed may be dismissed, the total number of employees that fall within this description at the establishment, the proposed selection method, the proposed method of carrying out the dismissals, the proposed method of calculating the redundancy payments, and information about the employer's use of agency workers.
Stage two can then commence during which the employer and employee reps try to reach agreement on ways in which the redundancies could be reduced or avoided altogether. This could include things like reducing agency numbers or putting a freeze on recruitment.
As with individual consultations, it will be important for the employer to consult with the trade union or employee reps on a wide range of matters, such as identifying the appropriate pool of employees at risk of redundancy, consulting with employees in the pool, and this should be a meaningful process in which the employer and employee look at any ways in which the redundancies could be avoided.
Now as an important point, no decision should have been taken about whether any employee is to be made redundant until the consultation process has been completed. Objective selection criteria should also be applied to those in the pool. It's sensible to try to get the trade union or employee reps' agreement to the selection criteria before it is used.
Consideration must also be given to whether there are suitable alternative employment for the employees. A failure to properly adhere to the statutory requirements on who to consult with and what to consult about, can lead to claims for unfair dismissal and for protective awards. These protective awards can be as much as 90 days gross pay, per employee. This is one of the most expensive liabilities that an employer can face.
What else must an employer do? If a collective redundancy situation arises, the employer must notify the Department for Employment and Learning, which is soon to be the Department for Economy.
What happens if it goes wrong? Usually this will end up with claims to the Employment Tribunal. Any claim must be brought either before the date of the last dismissal or within three months of the date on which the last dismissal took place. The tribunal may extend this time limit if it considers that it was not reasonably practicable for the complaint to have been lodged in time.
Who can bring a claim? Well, this depends on the nature of the claim. If it's about a failure to arrange or comply with the rules on elections, it can be brought by any of the affected employees, or any employee who has been dismissed as redundant.
If it concerns a failure to inform or consult a recognised trade union, the claim can only be brought by the trade union. If it concerns a failure to inform or consult other representatives, can only be brought by one or more of the representatives.
For any other claim, any of the affected employees, or any employee who has been dismissed as redundant can bring a claim. This means that the only time that an individual can bring a complaint, in relation to a failure to inform and consult in a collective situation, is where there is no trade union rep or appropriate employee represented [sic] elected.
Finally, what does "redundancy" mean in the context of collective consultations? Well, the definition of redundancy is broader than the statutory definition under the Employment Rights Order 1996. The statutory definition under that order covers business closures, workplace closures, and situations when an employer needs less people to do the work.
Collective redundancies, on the other hand, are governed by a European directive, which provides for a broader definition that may include situations like where an employer changes terms and conditions through termination and re-engagement.This article is correct at 02/06/2016
The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.