Tackling large scale redundancies and
staying on the right side of the law is not easy. What should HR professionals be doing to ensure they avoid infringing the law,
which can bring costly consequences? Joan Pettingill, from hlw McCombie
Commercial Lawyers, provides some essential advice.
Large scale or ‘collective’ redundancies
occur when over 19 employees at any single establishment are considered to be
at risk. Bear in mind that even if some people are going to be redeployed,
rather than leaving the business, they still count towards your total figure.
The number of employees affected can be a grey area. If you’re a retailer, for
example, does each store count as a different establishment? Or perhaps as the
process advances more people become at risk, taking you to the magic figure of
20. Seek legal advice if this issue is not clear-cut.
Pullquote: The fundamental
difference when it comes to large scale redundancies is the length of the
consultation period, before anyone can lawfully be given notice
The fundamental difference when it
comes to large scale redundancies is the length of the consultation period,
before anyone can lawfully be given notice. If you are potentially losing
between 20 and 99 people, this needs to be a minimum of 30 days and where the
total is 100 or more, it has to be at least 90 days. So it could be quite some
time before you can actually reduce headcount. There are other factors which
might add extra time to the process and it is vital you plan accordingly. These
- Any employee
potentially affected (even those not in line for redundancy but whom the action
will impact on) should have an ‘appropriate representative’, who will conduct
the consultation process on their behalf. This could include various union
- If employees do not have a recognised
union, you may have to hold an election for their representatives from among
your employees, in the form of a secret ballot.
- If no representatives come forward, but you
have done everything in your power to ensure this happens, you will have to
consult with staff on a one-to-one or group basis. If employee numbers are high
or you have limited HR staff, consider bringing in external consultants, to
conclude the process within a reasonable timeframe.
- Bear in mind that representatives may fall
sick or resign part way into the exercise. It therefore makes sense to have
back up plans.
The consultation process is designed
to be two-way, so you will make proposals and receive feedback on them, via the
employees’ representatives. You will be
expected to discuss ways of minimising or averting redundancies “with a view to
reaching agreement”. There may have to be some to-ing and fro-ing, which adds
time to the process, and if a final agreement cannot be reached, you should
compile evidence that you properly considered feedback received.
The consultation period starts when
you have put the detailed written proposal physically into the hands of your
employees’ representatives and, importantly, delivered it to the head office of
any trade unions involved. This proposal must include:
- The reason for the
- The numbers and descriptions of employees
- The proposed redundancy selection criteria
- The intended method of carrying out the
process, including timescales and redundancy payment calculations. It is
helpful to include a timeline of events if possible – even if, at this stage,
it does not contain many actual dates.
You must also attach a copy of the
HR1 form, notifying the secretary of state. Failure to do so is an offence,
which could bring you a fine. Some organisations prefer to pull together
something brief in order to begin the consultation period as soon as possible.
At hlw, however, we advise as much detailed forethought and planning as
possible. Employers can get into difficulties if they fail to properly disclose
the real reason behind needing to make redundancies. Best practice is to be as
open and honest as possible.
Of course, the standard redundancy rules apply to
large-scale cases too: you must consider alternative roles for those affected;
be sure you’re not being in any way discriminatory; don’t forget about absent
employees – those on maternity leave in particular must be given top priority;
and make sure you consider any pre-existing exit packages, as well as any
collective workforce or trade union agreements.
is vital the process is undertaken correctly. As well as potentially triggering
industrial action or tribunals, any failures on your part could lead to the
statutory penalty of 90 days net pay per employee, which might mean parting
with a very significant sum. Remember to communicate with your employees
throughout and allow the representatives sensible access to those affected.
People whose jobs are at risk will be scared and a lack of information fuels that
fear. If the consultation goes through and staff are put on notice, consider
getting a local job agency in to help them with CVs and explore future
Pettingill Head of Employment Team
HLW McCombie Commercial Lawyers.