What is a collective redundancy?
A collective redundancy is where 20 or more employees are to be dismissed within a 90-day period.
When can an employer carry out collective redundancies?
The European Court of Justice (ECJ) held that an employer is only entitled to carry out collective redundancies after concluding the consultation procedure and notification should be made before any notice of dismissal has been made.
Employers would be well advised to ensure they avoid giving notice of dismissal until consultation has been completed.
Notification to the Secretary of State for Business, Enterprise and Regulatory Reform
Section 193 (1) and (2) of the Trade Union and Labour Relations (Consolidation) Act 1992 provide that notice must given to the Secretary of State at least 90 days before proposing to dismiss as redundant 100 or more employees at one establishment within a period of 90 days or 30 days for between 20 and 99 employees before giving notice to terminate an employee’s contract of employment.
The date of notice is the date the notification is received by the Department for Business, Enterprise and Regulatory Reform (formerly the DTI). Failure to notify can lead to legal proceedings and on conviction up to a fine of £5,000.
Who should be consulted?
Trade union representatives must be consulted if the union is independent and recognised to conduct collective bargaining, there is no obligation on the employer to consult other representatives in these circumstances.
In a non-unionised workforce, appropriate, existing representatives (such as members of a works council or staff forum) or employee representatives who were specifically elected to deal with consultation on the proposed redundancies must be consulted.
If employees, having a genuine opportunity to do so, fail to elect representatives, the employer may provide information to the employees directly on an individual basis.
The employer should also consult the individuals who may be selected for redundancy.
What should redundancy consultation be about?
Consultation must be undertaken ‘with a view to reaching agreement’ and must cover ways of avoiding the dismissals, reducing the numbers to be dismissed and mitigating the consequences of the dismissals.
Employers should not give staff notice of dismissal prior to the conclusion of consultations, as this might be taken as an indication that the consultations are a sham. This view is backed by the ECJ.
What must be disclosed before redundancy consultations?
The employer must disclose in writing:
- the reasons for the proposed redundancies
- the numbers and descriptions of staff proposed for redundancy
- the total number of employees of those descriptions employed at the establishment in question
- the proposed method of selecting those who may be dismissed
- the proposed method of carrying out the dismissals, including the period over which the dismissals are to take effect
- the proposed method of calculating any redundancy payments.
The consultation process in practice
Consultation must take place 30 or 90 days before the redundancy notices take effect and before decisions to make redundancies have been made. There is no statutory time for how long the consultation period should last.
What happens if an employer fails to comply?
If an employer fails to comply with the collective consultation procedures, affected staff may bring a complaint before an employment tribunal within three months of the last of the dismissals. If the tribunal finds the complaint well-founded, it will make a declaration to that effect and may make a protective award.
The award requires the employer to pay the employees remuneration for a protected period, which begins on the date when the first of the dismissals to which the complaint relates took place, and ends up to 90 days later. If an employer fails to consult on an individual basis, an affected employee may bring a complaint of unfair dismissal.
Further information
Employment Rights Act 1996
The Trade Union and Labour Relations (Consolidation) Act 1992
Information and Consultation of Employees Regulations 2004
Useful resources
Redundancy consultation: a study of current practice and the effects of the 1995 regulations (PDF, 163kB)
Office of Public Sector Information (OPSI) – Collective Redundancy (Amendment) Regulations 2006 – Statutory Instrument – 2006 (No 2387)
Collective redundancies – employers duty to notify the Secretary of State – full regulatory impact assessment (PDF, 65kB)
Collective redundancies: employers duty to notify the Secretary of State – response to consultation September 2006 (PDF, 50kB)
Employees’ information and consultation rights on collective redundancies and transfers of undertakings
Redundancy and Insolvency: a guide for employees
Businesslink – Redundancy
Directgov – Redundancy
