When to consult with employees

There is a legal requirement to consult with employee representatives over impending redundancies when it is proposed that 20 or more employees are to be made redundant. If 100 or more redundancies are planned, then the minimum period for consultation before the redundancies take effect is 90 days, otherwise it is 30 days.

Employee representatives are not necessarily trade unions. Where there are no recognised consultation procedures with elected representatives from the workforce, the employer has to ensure that elected representatives are available to be consulted. If trade unions have recognition agreements, then the consultation must be with the unions’ elected representatives. The consultation is about:

• the reasons for the redundancies

• the potential number of redundancies

• the method of selection to be used

• how you will carry out redundancies

• how you will work out redundancy payments.

The consultation about the reasons for redundancies and the potential number of redundancies must include whether it is possible to avoid dismissals and reduce the number of redundancies made. In other words, the consultation is not just about process.

Protective awards in redundancy can be claimed by and given to employees whose employer fails to follow the statutory requirements for consultation. The employer is required to pay employees covered by a protective award their normal week’s pay for each week of a specified period, known as the protected period, regardless of whether or not they are still working. However, there is an upper limit of 90 days per person.

The rules around redundancy consultation have been the subject of a number of court cases in the past five years, with the key questions being: when is the duty to consult triggered and what constitutes an ‘establishment’ for consultation purposes (see below).

In May 2015, the European Court of Justice ruled that an ‘establishment’ is the entity to which workers are assigned to carry out their duties – in this case the particular store – regardless of how big the employer as a whole is. The case came about when Woolworths’ retail division collapsed and affirms the position originally taken by the company, that those people in larger stores with 20 or more employees were entitled to compensation for lack of redundancy consultation whereas those people in smaller stores were not. The question of when the duty to consult is triggered remains unclear. A European Court of Justice ruling in the 2009 Fujitsu case seemed to indicate the duty to consult was triggered both when the employer was contemplating making redundancies and when he proposed making them. The difference being that the proposal would be more concrete and might include specific numbers, whereas contemplation is much earlier in the process. At the time of writing the EU was in the process of consulting on possible changes to the employer’s duty to consult. The outcome of the consultation may resolve the question but is likely to be some time away. The best advice is to begin consultation as soon as possible, preferably before anything is set in stone. Remember this is consultation with representatives, not direct consultation with affected employees.

The question of what happens when an employer suddenly has to make redundancies and feels there isn’t time to consult has been considered by the Employment Appeal Tribunal (EAT). The EAT felt that under the particular circumstances of the case the full 30 days’ consultation was unworkable, so it was unduly harsh to award a full protective award. However, it made the point that some consultation could still have taken place. It is good industrial relations practice to be talking to representatives about the type of organisational changes needed, whether or not they will lead to redundancies.

The same periods for consultation when 20 or more employees are being made redundant apply to the requirement to submit compulsory notification to the Department for Business, Innovation and Skills (BIS) on form HR1 Advance notification of redundancies, which can be downloaded from www.gov.uk (enter the title in the search). Late notification or failure to notify BIS is an offence and you could be fined up to £5,000.