Following on from our previous article covering the process employers should follow in an individual redundancy consultation, we now focus on the practical steps an employer should go through to ensure compliance with the collective consultation process.
Individual consultation v collective consultation
As we mentioned in our previous article, in a redundancy scenario individual consultation is required no matter how many employees it is proposed are to be made redundant.
However, where 20 or more employees are to be made redundant at one establishment over a period of 90 days or less, an employer also has a duty to consult collectively.
In summary, this duty means that an employer must:
- inform appropriate employee representatives of certain information;
- consult appropriate employee representatives for a set period of time (depending on the numbers of employees affected); and
- notify the Secretary of State.
In this article, we focus on the steps which employers should take to ensure they meet these collective information and consultation obligations.
Summary of steps in a collective consultation process
Step 1: Determine when the obligation to collectively consult arises.
- In the UK, the obligation to collectively consult is triggered when there is a proposal to dismiss as redundant 20 or more employees at one establishment within a 90-day period. However, the European Directive which is the source of these UK rules states that the trigger is when redundancies are contemplated, which is generally accepted to be at an earlier point than the proposal stage. This discrepancy between the European and UK position often makes it difficult for employers to identify the proper trigger point for collective consultation. However, as a general rule, employers should start collective consultation once an identifiable plan is formulated which could result in redundancies, but well in advance of any final decisions being made in relation to that plan. It is worth remembering that an employer can be at the proposal stage even if other alternatives are still being considered.
- Another point to note is that, because of the wide definition of redundancy in the European Directive, the obligation to consult collectively will arise not only in a conventional redundancy situation, but also in a contract variation situation, where there is a proposal to give notice to bring existing contracts to an end with the offer of re-engagement on new terms (subject to the same number thresholds of 20 or more employees and a 90 day period).
Step 2: Ensure that appropriate employee representatives are in place.
- Appropriate employee representatives is an umbrella term, covering three separate potential categories of representatives:
- representatives of a recognised trade union;
- directly elected representatives, that is, elected by affected employees for the purpose of consultation on a specific redundancy proposal;and
- a standing body of elected or appointed representatives not specifically elected for the purpose of redundancy consultation but whose remit covers such consultation.
- Where an employer recognises a trade union, it must consult with representatives of that trade union in respect of any employees in the bargaining unit who are affected by the proposals. It does not matter whether the employees are themselves members of the trade union, only that they fall within the bargaining unit for which the union is recognised.
- Only where there is no recognised trade union can the employer then look to the other categories of employee representatives instead.
- Unless there is an existing employee representative body which is authorised to receive information and to consult on behalf of the affected employees, the employer will need to allow employees to appoint employee representatives for the specific redundancy consultation. There are strict rules around the election process to be followed. Employers should bear this in mind when setting the timetable for the consultation process, as nominations and elections will need to take place before the consultation process can begin.
Step 3: Notify the Secretary of State.
- This duty is also triggered where there is a proposal to make 20 or more employees redundant at one establishment in a 90-day period. This is usually done by completing an HR1 form and the timescales for making the notification reflect the minimum consultation periods set out below.
- Failure to so notify is a criminal offence for which an employer may receive an unlimited fine.
Step 4: Provide information to the appropriate representatives.
- Certain written information must be provided to the appropriate representatives as a minimum. This includes:
- the reason(s) for the proposed dismissals;
- the numbers and descriptions of employees whom it is proposed to dismiss as redundant; (c) the total number of employees of any such description employed by the employer at the establishment in question;
- the proposed method of selecting employees who may be dismissed;
- the proposed method of carrying out the dismissals, with due regard to any agreed procedure, including the period over which the dismissals are to take effect;
- the proposed method of calculating the amount of any redundancy payments to be made (over and above the statutory redundancy payment) to employees who may be dismissed;
- suitable information about the use of agency workers.
- Consultation cannot commence until sufficient information has been provided to the appropriate representatives.
Step 5: Consult with the appropriate representatives.
- The consultation process must include consultation 'with a view to reaching agreement with the appropriate representatives' on ways of:
- avoiding the dismissals;
- reducing the number of employees to be dismissed;
- mitigating the consequences of the dismissals.
- Consultation should be carried out with an open mind, and proper consideration should be given to any points made by the representatives.
- Consultation must last for certain minimum periods as follows:
- where the employer is proposing to dismiss 100 or more employees consultation must begin at least 45 days before the first dismissal takes effect;
- where the employer is proposing to dismiss between 20 and 99 employees consultation must begin at least 30 days before the first dismissal takes effect.
What if these steps are not followed?
The consequences of not following the collective consultation obligations can be significant. Successful protective award claims can result in awards of 90 days' gross pay per affected employee, which in a large scale redundancy situation can add up to a substantial sum of money, when the employer will already have incurred notice (if notice is not worked) and statutory redundancy payments. Given the risk involved, it is certainly worth employers taking time to ensure the correct process is followed.