Everything employers need to know about collective redundancies

Collective redundancies have hit the headlines recently, particularly due to Carillion’s handling of their collective consultation when the company collapsed in January. Other businesses facing financial struggles and the possible threat of liquidation has brought this issue into the spotlight. Carrying out collective redundancies can often prove particularly challenging and difficult for company directors and employees alike. As such, we are sharing the points you must be aware of during the redundancy consultation process.


Understanding the regulations for collective redundancies

Collective redundancies occur when a company initiates consultation to make 20 or more employees redundant within a 90 day period, at one single establishment. If this is the case, employees are entitled to a collective redundancy consultation with their employer, who must follow particular ‘rules’ when doing so.

Often, businesses run into many financial struggles during business life, and a collective redundancy may be required if they are looking to cut costs. Similarly, the company may be looking to relocate their business or even amend the structure of the business due to the increasing demands of their consumers.

Collective redundancy

Collective redundancy consultation

As mentioned above, where 20 or more employees are to be made redundant in 90 days or less, the employer has a duty to consult collectively. They must:

  • Inform the employee representatives (trade union or voted employee rep) of the information regarding the redundancy;
  • Consult the employee representatives for a set period of time;
  • Notify the Secretary of State.

The above consultation periods with appropriate representatives are an integral part of the collective redundancy process, and must be conducted early for any discussions. Government legislation states that the redundancy collective consultation should begin 30 days before the first employee is dismissed. However, if you are looking to make more than 100 employees redundant, the discussions should begin as early as 45 days before the first dismissal.

Consultation with representatives

As an employer, you must consult with employee representatives when looking to make more than 20 employees redundant.

Trade union representatives

If an employee is part of a recognised trade union, then you must consult with an authorised official. It’s important to note that the employer is not required to inform any other employee representatives in this scenario, but can do so voluntarily.

Employee representatives

If your employer doesn’t recognise a trade union or you are not part of one, you can elect representatives to take part in the redundancy collective consultation on your behalf. These individuals must have the authority to represent you. There are also strict rules around the election process of an employee representative, and this must be considered when setting the timetable for the collective redundancies. The representative should also have the time provided for any training if necessary.

It’s also important to note that the collective redundancy consultation must cover:

  • Methods in which to avoid the collective redundancies;
  • The reasons for the collective redundancy procedure;
  • How to minimise the number of collective redundancies;
  • Ways to limit the effects on all employees involved.

Rights of employees

Employee and trade union representatives are afforded certain rights and protections to allow them to take part in the collective redundancy consultation. A representative is allowed reasonable access to the people they represent, such as access to certain facilities. Similarly, they have a right to reasonable paid time off to fulfil your duties, but the criteria for ‘reasonable’ can differ with each case.

Contacting the government

Employers must alert the Secretary of State to their plans for collective redundancy if it is connected to a potential insolvency. Form HC1 must be filed with the Redundancy Payments Service for them to prepare the resources to deal with the redundancy claim.

The consequences for not following the above steps with regards to the redundancy collective consultation can prove severe. In the case of Carillion, Unite is seeking legal action due to their consultation periods, with employees looking for back pay. In a large-scale redundancy situation, back pay can add up to a substantial sum of money including a protective award. 

With the risks involved, it’s important you seek advice at the earliest possible opportunity. Our business rescue experts can provide advice on the procedure and ensuring you follow the legislation. Our team has been credited for working closely with the Jobcentre Rapid Response service to ensure the employees get the advice they need following collective redundancy in an insolvency situation.

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