Redundancy consultation | When and how?
With many businesses suffering through liquidation and administration, and many more commencing downsizing procedures, the topic of redundancy has scarcely been more pertinent than it is now.
That said, redundancy is certainly no silver bullet; it only applies in certain circumstances, and the various technicalities that surround it can often be disorienting and complex.
One such technicality is the issue of consultation – a mandatory process by which the employer must discuss the details of the redundancy with all relevant parties prior to it taking place. A simple concept on the surface, but potentially laden with complexities.
So when and how should employers initiate a redundancy consultation process?
Consultation: The basics
First, an initial announcement must be made to those at risk, which can usually be done in a group setting. Here, you are essentially explaining/selling the need to make redundancies to your workforce.
It’s important to remember that consultation should be ongoing throughout the process. The employer must consult with employees about how the redundancy ‘pool’ has been composed. For instance, if it is a departmental issue, this must be communicated by the organisation. Though of course, how smoothly this process goes is entirely dependent on what the criteria is, and could conceivably be contested by employees.
The employer must also consult with employees about how the redundancy ‘pool’ has been composed. For instance, if it is a departmental issue, this must be communicated by the organisation. Of course, how smoothly this process goes is entirely dependent on what the criteria is, and could conceivably be contested by employees.
Once the pool has been established, the process that follows is known as ‘scoring’. A set of criteria is established, and each employee will then be scored against each of the criteria. The employees with the lowest scores are then selected for redundancy.
Once this is completed, the employer would normally hold a further two meetings: one to allow the employee to discuss their scores, and another to discuss alternative employment and confirm redundancy and notice.
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There are some basic best practices that employers must ensure during the redundancy consultation process. Firstly, in order for the process to be fair, the employer must still be capable of being influenced. The consultation will only be meaningful if it happens at a formative stage rather than when there is a fait accompli. This means that consultation must be commenced before plans have crystalised.
Secondly, time is a particularly significant issue. Employees must be given reasonable time to consider what they are being told and formulate a response. This applies during every step of the redundancy exercise.
Finally, you should not just pay lip service to any responses during consultation. Consider what has been said, and if it doesn’t work, explain why before moving to the next stage.
Where an employer is proposing to dismiss 20 or more employees within a period of 90 days or less, there will be a requirement to collectively consult. The process must be conducted with either a recognised trade union or, in its absence, elected employee representatives.
If you are proposing between 20 and 99 redundancies, the consultation must start at least 30 days before the first dismissal. If the number is more than 100, that period is 45 days.
But when is the employer required to collectively consult? This will depend on three issues.
- Firstly whether there is a ‘proposal to dismiss’. This is really about what’s in the employer’s mind. If the employer is considered to merely be contemplating dismissals, then collective consultation is not required. Equally, if a decision has already been made, then this would be considered too late. If the timing is executed poorly, there may be a breach, which could affect the fairness of the dismissals.
- The second issue is whether the employer is proposing to dismiss 20 or more employees in 90 days or less. This is quite straightforward if you are only making one batch of redundancies, however potentially less so if there are going to be staggered redundancies over a period of time.
The final issue to determine is whether the 20 or more proposed dismissals take place at a single establishment. This is a question that was central during the liquidation of Woolworths in the UK. A number of stores were closing, and the employers argued that the chain qualified as a single establishment. The courts ruled against this, and therefore only the individual stores proposing 20 or more dismissals were required to collectively consult.
Note, however, that group companies are treated as separate employers, so redundancies across the group should not be aggregated.
Collective consultation does not eliminate the need for consultation with individual employees, and that is fundamental to the fairness of any dismissal for redundancy. It is also something that should be ongoing every step of the way.
The same best-practice approaches outlined above apply, and the matters that should be discussed during the individual consultation process will depend on the specific circumstances.
Individual consultation will typically take place after general information about rationale and selection has been provided, either as part of the formal collective consultation process or in group meetings if no formal collective consultation is required.
Individual consultation meetings are an opportunity for the employee to put forward suggestions as to how redundancies may be avoided and raise any objections around the basis for their provisional selection. It’s important that you listen, give serious consideration to the points raised, and respond.
Once the scoring is finalised, there should also be a final meeting with individual employees to discuss alternative employment and, in the absence of any suitable alternative role, confirm redundancy and notice. Whilst there is no legal obligation to offer an appeal, it is certainly best practice to do so and something we would recommend in most cases.
Note that the statutory right to be accompanied only applies to attendance at disciplinary and grievance meetings and not, specifically, redundancy consultation meetings. However, as a matter of best practice, we would recommend it.
Finally, remember, if there is a redundancy policy dealing with procedure and consultation, that should of course be followed.
Get redundancy right with Ellis Whittam
Whether you need step-by-step guidance through the redundancy process, hands-on assistance with conducting consultations, or full end-to-end project management, our highly-skilled HR and Employment Law experts can help you to minimise management stress and ensure compliance. Learn more about our redundancy support.
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