The Government guidance and restrictions are constantly under review at the moment which is impacting the way in which employers will be running their business. We understand that, due to the great uncertainty at the moment, employers may be considering redundancies now or in the near future once the Government’s furlough scheme comes to end. We have therefore updated our redundancy blog series which was originally released last year with some useful tips and guidance on how to carry out a redundancy consultation process.
The funding by the Government under the Job Retention Scheme has been extended until the end of April 2021 however, it is not known what support will available after this time. Scotland has recently entered into a further period of lockdown and there is unfortunately a reduced need for some business services. Some employers may be looking at making redundancies if they can no longer afford to pay staff (or if they no longer require the same staffing levels) once Government funding is no longer available. We understand that employers will likely be considering their options now and it is important that employers are aware of the correct redundancy process to follow in order to avoid or minimise unfair dismissal claims.
Definition of redundancy
Before an employer can consider redundancies, the statutory test must be met. An employee can be dismissed by reason of redundancy if the one of the following applies:
- The employer ceases, or intends to cease, to carry on business
- The employer intends to close the site at which the employee works
- There is a reduced requirement in the business for employees to continue to carry out work of a particular kind
Whilst there is no statutory procedure where fewer than 20 redundancies are planned, it is important to follow a fair procedure and consult fully with affected employees and their representatives.
Employees should be given fair warning of any planned redundancies and invited to consultation meetings to discuss the proposals. Employees should also be provided with adequate time and opportunity to respond to the proposals. There is no prescribed timescale for individual consultation however, case law suggests that 7 days would be an adequate consultation period as a bare minimum. Typically, this would involve at least two individual consultation meetings with each employee.
Example: Bedrock Bakery employs 20 members of staff. They propose to make 5 employees redundant as there is currently a reduced service requirement at the bakery and they need to reduce the number of bakers in the kitchen (the next blog in this series will take a closer look at how to select those who are at risk of redundancy – known as the pool for selection). Bedrock Bakery will require to individually consult with the employees who are in the role of ‘baker’ who are at risk of redundancy. Ideally Bedrock Bakery will hold two individual meetings with the employees to discuss the proposals and hear the employees’ views on the matter. As a minimum they should consult for 7 days then provide the individuals with a note of their decision.
Where an employer proposes to make 20 or more redundancies within a 90-day period, at one establishment, the employer will have to engage in collective consultation with a trade union or elected employee representatives of the affected employees and also notify the Department for Business, Energy and Industrial Strategy (“BEIS”). If no such representatives are in place, part of this process involves facilitating an election to appoint representatives.
Consultation must be completed over a reasonable amount of time. Where fewer than 100 redundancies are proposed, consultation must begin at least 30 days prior to the first dismissal taking place. Where 100 or more redundancies are proposed, the minimum consultation period is 45 days.
The consultation process must be undertaken with the aim to reach an agreement on ways to avoid or reduce the number of dismissals and mitigate their consequences.
Example – Bedrock Bakery employs 100 staff members across their sites in Scotland and proposes to make 50 members of staff redundant within the next 90 days as they intend to close a number of their sites.
Step 1 – Bedrock Bakery need to determine how they should consult with employees. In this scenario as they are proposing more than 20 redundancies they will require to collectively consult. As they are proposing less than 100 redundancies the minimum consultation period is 30 days. They will need to identify which establishments (i.e. which of their bakeries) they are making 20 or more redundancies at. For example, if they are making 19 redundancies each, at 4 different shops all over Scotland, they might not need to worry about collective consultation. If, however, there are 20 or more at any establishment, then the collective rules will be engaged.
Step 2 – Bedrock Bakery should look to see if there is a recognised trade union to represent the affected employees and, if not, allow employees to elect employee representatives (if there is not an existing employee representative body). They should also notify BEIS of the proposed redundancies.
Step 3 – Bedrock Bakery should provide representatives with information in relation to the proposals including: the reasons for the proposed dismissals, the number of and type of employees that are at risk (i.e. what sites are being closed), the proposed method of selecting employees to be dismissed and the proposed calculation of redundancy payment. The representatives should then be given the opportunity to consider and respond to the proposals.
Step 4 – Bedrock Bakery should attempt to come to an agreement with the representatives regarding the proposals and exhaust all possibilities for agreement. If they are unable to come to an agreement within the minimum time period of 30 days, they may cease the consultation exercise and begin to implement the redundancy proposals.
It is important that employers take the time to ensure that they follow the correct fair procedure as, if they do not do this, they put themselves at risk of having to pay out further substantial sums of money if the Employment Tribunal later finds that there has been an unfair dismissal. In addition to unfair dismissal, employees can claim protective awards of 90 days’ pay per employee, for a failure to collectively consult.
If you need any advice about carrying out a redundancy exercise, get in touch with Blackadders’ Employment Team working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.
Donna Reynolds, Partner
Accredited by the Law Society of Scotland as a Specialist in Employment Law & Discrimination Law
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