Collective redundancies: 10 do’s and don’ts

One of the most expensive liabilities an employer can face arises from a failure to comply with collective consultation obligations.

The risk of protective awards of up to 90 days’ uncapped pay per affected employee, coupled with the possibility of unfair dismissal compensation if due process is not followed, means that employers must take great care to comply with their statutory duties where 20 or more redundancies are proposed in a 90-day period.

1. Don’t delay consultation

Don’t delay starting consultation just because other cost-cutting measures are still on the table, or because you do not yet have all the relevant information about proposed redundancies. Case law is clear that collective consultation is an organic process and that information can (and should) be fed through to representatives as and when it becomes available.

2. Do have appropriate representatives in place before you begin consulting

If 20 or more redundancies are proposed within a 90-day period, ensure “appropriate representatives” are in place before starting to consult individually with those at risk. Appropriate representatives of the affected employees will typically be trade union representatives or members of an employee forum elected internally for consultation purposes.

3. Do consider front-loading your collective consultation process

Once you have determined that a 30- or 90-day consultation process will be required, it makes sense to front-load that process where possible so it is completed in good time and ideally before individual redundancy consultation begins.

4. Do present information clearly, with enough detail to enable meaningful consultation

Take care when drafting information communications to representatives. Consultation must be meaningful, and unless information is given in such a way that the reader is able to understand the proposals properly, there is a real risk of a tribunal finding the consultation process a sham. Avoid “management speak” where possible, using plain English instead.

XpertHR answers key collective redundancy questions

 5. Do consider who should manage the selection process

Ensure the manager conducting the scoring exercise does so armed with adequate and relevant knowledge of the skills and experience of those within the pool at risk. Objectively verifiable evidence should be available to support and explain the scores given to individuals – for instance, appraisals or sales figures (where appropriate). Managers should take care not to rely simply on personal feedback.

6. Don’t lay unnecessary paper trails

 All too often an otherwise well-planned redundancy process is hampered in subsequent litigation by unhelpful documents created before or during the process. Managers should be reminded before consultation starts that relevant written documents can be disclosed in litigation. Encourage verbal discussions instead of e-mails, and keep your legal team closely involved in any written communications so privilege can be retained where possible.

7. Don’t just go through the motions of searching for suitable alternative roles

Searching for alternative employment opportunities for individuals at risk of redundancy forms part of an employer’s duty to ensure a redundancy process is fair and reasonable. Merely asking the employee to submit their CV to the company will not suffice. Don’t assume that an employee who has been placed at risk of redundancy in one role will therefore be unsuitable for vacancies in other areas of your organisation. Keep an open mind.

8. Do bear in mind your actions during the consultation process

XpertHR Good practice guide

While informing and consulting in a redundancy situation is a legal requirement, thorough provision of information and effective consultation can lead to fewer interruptions to business and costs savings during the redundancy process, as the XpertHR Good practice guide on informing and consulting during a collective redundancy process explains.

Consider how you will deal with individuals not required to come into the office for the duration of the consultation process. Will your actions serve to indicate that a decision has already been made? You should also consider what message colleagues should give clients (if asked) about the reason for the at risk employee’s absence.

9. Don’t forget about the HR1

Employers proposing collective dismissals must remember to notify the secretary of state at the Department for Business, Innovation and Skills (BIS) using form HR1. This notification should be sent on the same day that collective consultation begins, and a copy must be given to the appropriate employee representatives. If numbers increase, it is important to update BIS accordingly. But proposed dismissals already notified to BIS should not be included in the calculation of subsequent redundancies for this purpose. A failure to notify BIS is a criminal offence carrying potential fines of up to £5,000.

10. Don’t forget to consult individually

Remember that even the most thorough collective consultation process will not negate the need to consult individually with employees at risk. Employers who fail to consult individually as well as collectively run the risk of a tribunal finding that any ultimate dismissal was unfair. Usually, only employee representatives can bring claims about a failure to consult collectively, but individuals may bring them where workplaces have failed to appoint representatives.

Kate Novak, senior associate, Jones Day

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