Redundancy and collective consultation

When 20 or more employees could potentially be dismissed by reason of redundancy, employers have:

• a duty to inform; and
• a duty to undertake fair consultation, prior to any individual consultation taking place.

As there are a large number of employees involved, it is impractical for all employees to be informed of the redundancies and consulted individually at the initial stage. Therefore, employers must inform and consult with “appropriate representatives” of the affected employees.

Who the appropriate representatives are will be case-specific, and so employers must look at the composition of the affected employees to determine this:

• If an employer recognises a trade union in respect of all the affected employees, it is the trade union representatives with whom the employer should consult;
• If an employer recognises a trade union in respect of some of the affected employees, it is the trade union representatives with whom the employer should consult regarding these employees only; and
• If all/some of the affected employees do not have a recognised trade union, the employer should see if there is some other standing body of representatives with authority to consult on the employee’s behalf, for example, a works council. If so, the employer may either:
• Inform and consult this appropriate standing body of representatives elected for some other purpose; or
• Hold an election to allow the affected employees to directly elect new employee representatives whom the employer will inform and consult with.

The process to elect new employee representatives

Candidates:

• Ensure that all the candidates for election are affected employees; and
• Do not unreasonably exclude an affected employee from standing for election. This does not prohibit reasonable restrictions being placed on candidacy by the employer, such as a minimum length of service which may be required to ensure the candidate is fully aware of the issues that would concern the affected employees.

Numbers:

• • Ensure there are enough representatives to represent the interests of all affected employees, specifically considering the number of affected employees and their job roles; and

• Consider if the affected employees should be divided into groups and have each group represented, e.g. by seniority level/ geographical local/ job area.

Term of office:

• Decide a term of office before the election;
• Ensure that the term of office is long enough to allow for the information and consultation process to take place; and
• Consider if subsequent collective redundancies are going to occur because you may want to keep the employee representatives to avoid having new elections.

Voting:

• Allow all affected employees to vote;
• Ensure that the voting takes place in secret and that, as far as possible, all votes cast are counted; and
• Decide what voting systems will be used in the election.

Staying informed:

Employers must keep up to date with the employee representatives to ensure that they are fulfilling their role. This includes ensuring that if any employee representative ceases to act (e.g. if they resign or are unable to act), there are new elections held.

Inform affected employees:

Before the election process begins, affected employees must be told about the proposals. This can be done in writing but is best-done face-to-face via a “state of the nation” speech to all employees involved.

Preparation for the election:

• Decide who will run the election. The employer does not have to appoint a third party to run the election, but the process may run more smoothly if they do because a third party is likely to be seen as more independent;
• Make available a list of eligible voters. It is good practice to circulate this beforehand so that if there are any issues, they can be rectified;
• Ensure there is a clear timeline for the elections, allowing enough time for the employer to begin consultation with the employee representatives in accordance with the time limits (see below).

Nomination stage:

• Prepare a notice to confirm the purpose of the election and invite nominations for employee representatives. In this notice, it is good practice to:
• Explain the role of employee representatives;
• Set out who can make nominations (and how many). It is advisable to place a limit on this, so the election does not become unworkable;
• Set out how many nominations are needed to become a candidate in the election;
• Explain how the election candidates will be announced and when;
• Set out when nominations open/ close; and
• Provide details of how to submit nominations.

Ballot stage:

Based on the nominations, the candidates for election should be announced.

They may be:

• Given a chance to prepare an election statement;
• Decide if the ballot will be via a workplace vote or a postal vote;

If there is a postal ballot, eligible voters must be told that late votes will not count; and an election notice should be given to all eligible voters, containing:

• A list of all the candidates (if there is only one for an area if should be explained that no ballot will occur);
• When the vote will occur and how;
• How many votes each affected employee has;
• Who will count the votes (and who will supervise this);
• How the results will be announced; and
• Who makes final decisions regarding the election.

Counting votes:

• Count votes as soon as practicable after the close of polls;
• Designate certain individuals to count all the votes and supervisors to monitor the counting;

Candidates should be allowed to observe the count.

Notification of the result:

The result should be made available as soon as possible after the count of votes has taken place; and
the votes should be kept safe for a minimum period of four months to ensure that if any claim for unfair dismissal arises, the employer can defend the claim by demonstrating a fair election process.

Duty of notification:

The employer must also notify the Department for Business, Energy and Industrial Strategy (“BEIS”) by completing an HR1 Form. A certain period of time must pass between notifying the BEIS and any potential dismissals occurring. This time period depends on the numbers involved.

The set time periods which employers must be aware of and comply with are:

• Where there are 100 or more redundancies proposed, no employee can be dismissed until at least 45 days have passed after the BEIS receives notification; and
• Where there are 20-99 redundancies proposed, no employee can be dismissed until at least 30 days have passed after the BEIS receives a notification.

Time limits for consultations

Consultation with the representatives must begin in good time as there are minimum time periods set, which prevent any employees being dismissed by reason of redundancy in a set period after the consultation has started (as set out above). The time period which employers must abide by is case-specific as it depends on the numbers involved.

The set time periods which employers must be aware of and comply with are:

• Where there are 100 or more redundancies proposed, no employee can be dismissed until at least 45 days have passed after the start of consultation; and
• Where there are 20-99 redundancies proposed, no employee can be dismissed until at least 30 days have passed after the start of the consultation.

The consultation is taken to begin when the employer provides information on the proposals to the appropriate representatives. It is therefore important to ensure that if the election of employee representatives is required, this takes place in a time-efficient manner as this does not form part of the 45/30-day consultation window, and therefore has the potential to cause significant delays in the overall process.

What the duty to “inform” and “consult” involves

This duty has been split into two stages:

• The provision of written information; and
• The consultation on the proposed redundancies, with a view to reaching an agreement.

Stage one:
The employer needs to give the appropriate representatives written information detailing the proposed redundancies. In this, the employer should cover:

• The reasons for the proposed dismissals;
• The roles it proposes to remove;
• The proposed method of selecting employees who may be dismissed;
• The proposed method of carrying out the dismissals; and
• The proposed method for calculating the amount of redundancy pay.

If the employer has agency workers, further information should be given. Agency workers have a complex status so you should seek advice in this situation.

The employer must provide sufficient information to enable meaningful consultation to take place. The employer’s plans regarding its proposal may change. However, this is not an adequate reason to prevent information from being given to the appropriate representatives at the outset of consultation. If the proposals do change, the employer has a continuing duty to inform the appropriate representatives of these changes.

Stage two:

For the consultation to be deemed “fair”, the proposals must still be at an early stage and not set in stone when consultation begins. Furthermore, the appropriate representatives must be given sufficient time to respond to the proposals and put forward their ideas. The employer should thoroughly consider any new proposals made by the appropriate representatives. The employer must enter the consultation with an open mind and with a willingness to consider other suggestions.

The employer should consult with the appropriate representatives “to reach an agreement” on the following matters in particular:

• Avoiding the dismissals;
• Reducing the number of dismissals; and
• Mitigating the consequences of the dismissals.

Only once collective consultation has concluded, the individual consultation can begin.

Penalties

If the employer does not follow the overall process or the time limits listed above, any affected employees can be awarded up to 90 days’ gross annual pay each, known as the “Protective Award”. The employee is provided with a gross week’s pay for each week in the protected period and a proportional sum for each part week in the protected period. There is no cap on the gross weekly pay the employee can receive.

*Wright Hassall has published a full guide to redundancy here.

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