09 March 2022

Whenever there is a collective redundancy situation, as well as individual consultation there is also a requirement for collective consultation of the workforce affected. The two processes will often run in parallel and may sometimes overlap, although some aspects of the collective consultation will need to take place first. The definition of redundancy is wide where you are looking at larger numbers. Effectively it means any dismissal not related to a particular individual including:

  • dismissal by the employer because there is no work;
  • a dismissal for some other substantial reason;
  • a dismissal and re-engagement on different terms; and
  • a constructive dismissal resignation – an indirect redundancy.

It does not include is the expiry of a fixed term contract or a dismissal that specifically relates to an individual.

When must an employer inform and consult collectively (with trade unions or employee representatives) about redundancy?

Where 20 or more employees are to be made redundant at one establishment within a period of up to 90 days, the employer must consult employee representatives about certain aspects. If no trades union is recognised or other workforce consultative body exists for the workforce affected, the employer will have to hold elections for the affected employees to elect employee representatives from the affected workforce for the purposes of that consultation.

How do these collective consultation requirements connect with other workforce change proposals that affect larger numbers?

Redundancy has a wider meaning in terms of collective consultation. Collective consultation is required for all of the below. To establish whether the numbers in scope reach the threshold for collective consultation and which consultation period is triggered, where any or all of these may apply within a period of 90 days, the numbers in each category are aggregated.

  • Dismissal by the employer because there is no work.
  • Dismissal for some other substantial reason.
  • Dismissal and re-engagement on different terms.
  • Constructive dismissal resignation – an indirect redundancy.
  • Voluntary redundancy.

The only terminations of employment not included as redundancy for collective consultation purposes are:

  • the expiry of a fixed term contract; or
  • a dismissal that specifically relates to an individual.

What other notifications are required for larger groups of redundancies?

The employer must notify the Secretary of State (BEIS) that it is planning to make collective redundancies:

  • at least 30 days before the first dismissal takes effect (in other words, the date on which notice is to expire or employment is to end) where the employer proposes to dismiss 20 to 99 employees within a 90-day period; or
  • at least 45 days before the first dismissal takes effect where the employer proposes to dismiss 100 or more employees within a 90-day period.

The notification must be in writing (either by letter or on a form HR1) and a copy must be provided to the employee representatives or trades union. The employees cannot be given notice of dismissal until the Secretary of State has been notified.

One establishment

Dismissals at 'one establishment' – this has a wide interpretation. It can mean a physical presence and the place of work to which employees are assigned to carry out their duties.

Multi companies on one site are counted separately.

Separate geographical locations can be counted together as one establishment, e.g. building operations on 14 sites with a common HQ as an administrative base would be a single establishment.

Who do you need to consult?

You need to consult with employees affected by the proposed dismissals or who may be affected by measures taken in connection with those dismissals.

The measures affecting other employees here have the widest scope and includes:

  • any organisational step taken in connection with or as a result of proposed redundancies;
  • new systems of work;
  • new working hours or arrangements;
  • proposed variations to contracts of employment;
  • new reporting lines; and
  • new organisational arrangements.

Who can constitute appropriate representatives for collective consultation purposes?

These will be either:

  • the representatives of any recognised trade union for a bargaining unit where the affected employees are members of that unit;
  • directly elected representatives for the purposes of that redundancy consultation; or
  • a standing body of elected or appointed representatives.

What is needed to elect representatives for the specific redundancy proposals?

Arrangements need to be made which are reasonably practicable to ensure the election is fair.

There also needs to be sufficient representatives to represent the number and classes of affected employees. It is necessary to achieve a secret ballot as far as possible as well as the accurate counting of the votes.

The employer has to prove it complied with the statutory requirements and failures in the election process can lead to a statutory protective award.  

When must collective consultation be carried out?

There must be consultation 'in good time' but there can be no consultation which qualifies as collective consultation until the representatives have been elected. There needs to be a sufficient number elected to cover any representative who ceases to act or the employer may have to start the election again.

What is the process of consultation?

A consultation is 'with a view to reaching agreement' although the employer does not have to actually make an agreement.  However, it must be a genuine dialogue, not a dictat.  

What information must be provided to the representatives?

The information to be provided to the representatives is as follows:

  • reasons for the proposed dismissals;
  • the numbers and descriptions of employees it is proposed to dismiss;
  • the total number of employees of any description employed by the employer at the establishment in question;
  • the proposed method of selecting employees;
  • the proposed method of carrying out dismissals (under the agreed procedure) including the period over which the dismissals will take effect;
  • the proposed method of calculating the amount of any redundancy payment (over and above any statutory redundancy payment); and
  • 'suitable information' about its use of agency workers – suitable information is: 
    • the number of agency workers, the parts of the undertaking in which they are working;
    • the type of work they are carrying out.  

How should this information be provided to the representatives?

It should be given in writing and either delivered to the representatives individually or sent by post to an address notified by the representatives to the employer or, when required to be given to a trade union, must be posted to the trade union’s head office.

Giving the information direct to the employees themselves is not compliant except where the affected employees fail to elect representatives within a reasonable timeframe.

When must this information be provided?

This must be given after and not before the election.

What is required to be done during the consultation?

Consultation is required with a view to reaching agreement with the appropriate representatives on ways of:

  • avoiding the dismissals;
  • reducing the number of employees to be dismissed; or
  • mitigating the consequences of the dismissal.  

Consultation must be with an open mind and must consult about the business reasons for the dismissal.  

There is no obligation to consult about the measures that may be taken in connection with the redundancies.  

When can you action the redundancies?

There is no set time. When the consultation has run and if you reach agreement as to the proposals or if it is clear there will be no agreement the consultation will be concluded. Once notice of termination is given, the consultation is at an end.  There is a risk of a claim for a protective award if the employer moves to issuing notice of termination too soon.

When might you not need to consult?

When the employees do not elect representatives. However, since the employer organises the election, this is unlikely. There are very limited circumstances, called special circumstances, which are a defence to failing to consult but these are very limited. Receiving instructions from a parent company to make the redundancies is not special circumstances and the need for confidentiality on its own is also not special circumstances.

Are there sanctions for failing either to conduct collective consultation at all or for missing any of the stages or undertaking them incorrectly?

A protective award of up to 90 days gross pay for protected employees (those affected) can be made in addition to other payments or awards unless there are special circumstances.

What is the sanction for failing to notify BEIS?

Failure to provide the notification to the Secretary of State is a criminal offence and the employer and its directors will be liable on summary conviction to a fine not exceeding level 5 on the standard scale. Level 5 criminal fines are unlimited.

Who can claim the protective award?

Claims for failure to arrange the election made by any employee. Claims for failure to inform and consult the trade union can only be brought by the trade union. Claims for failure to inform and consult other representatives can only be brought by a representative.

Any other claim can by brought by any affected employee or any dismissed as redundant.;

Can these claims be resolved by agreement?

Claims for failure to collectively consult cannot be settled under a Settlement Agreement but only by an ACAS conciliated settlement.

The amount of a protective award is a week’s pay for the just and equitable period but capped at the 90 day period, although the amount of a week’s pay is not capped.

For more information, please contact Charlie Barnes.

Charlie Barnes
Charlie Barnes
Director, Head of Employment Legal Services
Charlie Barnes
Charlie Barnes
Director, Head of Employment Legal Services