With Rolls Royce's announcement of potential job cuts adding to the list of high profile employers placing employees at risk of redundancy, we look at the practical steps an employer should take to ensure a fair redundancy consultation process.
Individual consultation v collective consultation
Individual consultation is required in all cases. However, where 20 or more employees are being made redundant over a period of 90 days or less, an employer also has a duty to consult collectively, which means they should:
- inform appropriate employee representatives;
- consult appropriate employee representatives for a set period of time depending on the numbers of employees affected;
- notify the Secretary of State.
In this article, we will focus on individual rather than collective consultation. Regardless of whether there is an obligation to consult collectively, the employer will need to ensure that it has followed a fair procedure in relation to individuals, including consulting with them properly, so as to minimise the risk of claims for unfair dismissal.
Question of fairness
Even if a dismissal is genuinely on grounds of redundancy, whether it is fair or unfair to dismiss an employee on grounds of redundancy normally depends upon whether the employer acted reasonably in reaching the decision to dismiss.
The question of what it means to act reasonably in a redundancy context has been considered in two key cases, Williams and ors v Compair Maxam Ltd and Polkey v A E Dayton Services Ltd. Helpfully, these cases have laid down guidelines for employers to follow in order to demonstrate they have acted reasonably. These are summarised in the following steps.
Summary of steps in an individual consultation process
Step 1: Announcement to all potentially affected employees.
- The reasons for the redundancy proposals;
- The process to be followed and whether volunteers are to be requested;
- The pool and method for proposed selection.
Step 2: Hold an individual meeting with each potentially affected employee.
- That you are proposing changes, which, if adopted, could result in redundancies;
- The reasons for the proposed changes and pool which has been chosen;
- That their role is potentially at risk;
- You will consult about selection criteria and ways to avoid redundancies and/or mitigate consequences;
- When you envisage proposed redundancies will take effect;
- Potential redundancy packages if redundancies cannot be avoided;
- That they will have the opportunity to consider consequences e.g. allowed time off work.
The contents of meeting should then be confirmed in a follow up letter to the employee.
Step 3: Give the employee time to consider the position.
Step 4: Hold a second meeting with each potentially affected employee.
- The employee's thoughts on the proposed pool and selection criteria;
- Any suggestions which they have on ways to avoid redundancies and/or mitigate the consequences.
NB: You may need to adjourn this meeting to consider the points further and then reconvene to respond to any points raised by the employee.
Step 5: If no alternatives have been found, carry out the selection process.
Step 6: Hold third meeting with each employee.
During the meeting:
- Confirm the outcome of the selection process;
- Give the employee a chance to challenge their selection;
- Respond to suggestions made by the employee;
- Look for alternative employment.
Step 7: Review of process to date
- Consider any suggestions/applications made by the employee for alternative employment;
- Consider any other points raised by the employee during the process - further meetings may be required to respond to these points;
- Once consultation completed, if no alternative is found write to the employee to invite them to a final meeting;
- Confirm in writing that no alternative has been identified and warn the employee that they may be given notice of dismissal at the final meeting.
Step 8: Hold final meeting
At the meeting:
- Reiterate the reasons for the redundancy proposals;
- Answer any final queries the employee may have;
- Discuss any attempts to find alternative employment and confirm the position in relation to any alternative roles;
- If no outstanding points and no alternative available, issue notice of termination to the employee;
- Confirm the termination date, payments and right of appeal;
Again, the contents of the meeting should be confirmed in writing to the employee including the right of appeal. If the employee raises an appeal, then this will need to be addressed as an additional step in the process.