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.
In Parts 1 and 2 of our series of blogs we looked at when a redundancy situation might arise, gave an overview of both individual consultation and collective consultation and how to fairly select those employees who will be at risk from redundancy should be selected. in Part 3 we explain how employers conduct a redundancy consultation with those employees at risk of redundancy.
Why consult at all?
The aim of consultation is to provide employees at risk with a way to influence the redundancy process and potentially the outcome, for example, employees on being informed of the selection may make a convincing argument that it should be widened or make suggestions that could reduce the number or impact of redundancies. Ideally, the outcome of the consultation will be an agreement between the employer and employees (or their trade or employee representatives in the case of collective consultation) about any action to be taken but, if agreement cannot be reached, at the very least, it should be conducted in a way that ensures the employees (or their representatives) understand what is being proposed and why, their views have been heard and they understand why the proposed redundancies have been implemented.
Without consulting, or without conducting a meaningful or genuine consultation, any subsequent dismissal by reason of redundancy, is likely to be unfair.
How does an employer conduct a consultation?
The employer first has to know with whom it is consulting and that depends on whether the employer is conducting collective consultation and/or individual consultation.
If an employer recognises a trade union it should collectively consult with trade union representatives. An employer that consults with a trade union is not required to collectively consult with anybody else. Where a trade union is not recognised (or the employees work in a part of the business that is not represented by a recognised trade union), the employer should make necessary arrangements to allow the employees to elect employee representatives. This is unless there are existing employee representatives, for example, a competent employees’ work council with authority to represent the employees. These employee representatives will consult with the employees on their behalf in much the same way trade union representatives would.
The consultation begins with providing specific information in writing to the representatives including the number of, and the reasons for the, proposed redundancies, details of the selection criteria and how redundancy payments are calculated. In the minimum consultation period that then follows (a 30-day or 45-day period depending on the number of proposed redundancies in a 90-day period), topics that should be covered include:
- the reasons for redundancies;
- ways to avoid redundancies;
- how to keep the number of redundancy dismissals to a minimum; and
- how to limit the effects on those dismissed.
Employers should always consult individually those employees who have been provisionally selected for redundancy and will normally include the same topics for discussion as collective redundancy as well as each employees’ score (giving them an opportunity to challenge their own score), redundancy payments and suitable alternative employment which employers have a duty to identify and, if available, offer.
It is important to distinguish between alternative employment and suitable alternative employment. If an employee rejects the offer of the former he or she does not lose the right to a statutory redundancy payment, however, if he or she unreasonably rejects the offer of the latter, the employee will no longer be entitled to a redundancy payment. Whether an employee has reasonably rejected an offer of suitable alternative employment will depend on factors including how and when the offer was made by the employer meaning an employer should ensure that this issue is properly discussed and considered during the consultation.
How long should the consultation last?
A collective redundancy must begin “in good time” before any dismissal is proposed to take effect and it should take as long as is necessary, always ensuring that it lasts at least the minimum 30-day or 45-day period required. Notice of dismissal cannot be given until after the consultation has been completed.
There may be occasions when a meaningful collective consultation is genuinely completed within the minimum consultation period in which case, an employer can give notice of dismissal before it comes to an end but the last day of employment cannot fall before that minimum period. There may also be special circumstances where it is not reasonably practical to consult fully or at all but an employer must still do everything it can to ensure that there is a consultation and it is as full as possible. Advice should always be taken if an employer is contemplating relying on ‘special circumstances’ to short circuit collective consultation.
Individual consultation should also take as long as is necessary but the 30-day or 45-day rule does not apply. Instead, an employer should aim to consult over at least a 7-day period.
What happens if an employer does not consult?
Consultation is fundamental to a fair redundancy process.
Where there has been a failure to conduct a proper collective consultation, an employee or his or her representative can make a claim to the Employment Tribunal for a ‘protective award’. This might because the consultation did not start early enough, it ended too early or the consultation was not meaningful or genuine. A protective award is up to 90 days’ pay for each affected employee.
In addition, even where collective consultation has taken place, there is a separate duty to consult individually with each employee at risk. A failure to consult can lead to a compensatory award for a successful unfair dismissal claim.
The intricacies of redundancy consultation are complex, particularly given the recent lockdown. It is far preferable (and cheaper) for employers to take advice before they start consulting, rather than during or after consultation has concluded.
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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