Dealing with redundancies of more than 20 employees

The process of running a redundancy exercise with employees working from home and scattered across the country or out on furlough is not going to be easy.  Where it is envisaged that 20 or more employees will be made redundant there are added pressures on employers as they have to comply with more detailed consultation requirements than is the case for redundancies of less than 20 employees.

To guide you we look at:

Special redundancy consultation rules

If you are considering making redundancies:

  • that are large-scale – more than 20 employees at the same time;
  • from one site (or area of your business); and
  • within a period of 90 days,

you must consult on the redundancy proposal with representatives of the affected employees. This is known as conducting a collective redundancy consultation. The requirement for collective consultation is distinct from the obligation to consult with individuals who are at risk of redundancy. Individual consultation will be required when redundancies are being considered no matter how many employees are affected.

Consultations

Although the redundancies may seem urgent from a business perspective, it is a statutory requirement that a collective redundancy consultation is carried out.

Similarly, you may think that there is no need to engage in a consultation process because the future is too uncertain, you want to wait until it is clear which areas of the business are affected in order to decide who to make redundant.

However, contemplating redundancy (even if the business areas or number of redundancies is not yet fully known) will trigger the obligation to hold a collective redundancy consultation. Contrary to popular belief the Coronavirus outbreak does not entitle employers to ignore the redundancy process.

While government guidance does not specify whether furloughed workers can be required to attend consultation without breaking the prohibition on doing work, we are of the view that such consultation is permissible on the basis it does not make money or provide services to the employer.

What has to be said when and to whom

We look at the steps an employer should work through where collective redundancy consultation is required.

Is there a genuine redundancy situation?

Broadly, this means that you need to have considered the circumstances around the redundancy situation and you must be able to evidence how you have reached the conclusion that redundancies are necessary.

Defining the ‘establishment’ from which you are making redundancies

Part of your analysis should include from which parts of the business you will make the redundancies. For the collective redundancy process to apply the redundancies must all be from a single ‘establishment’.

For smaller businesses this may be the entire business, but it is worth being aware that a single ‘establishment’ is not defined purely geographically. The court interprets this to cover ‘any unit to which employees are assigned to carry out duties’ – so structural/organisational factors, such as teams, are also important. 

Example of who to talk to

Take, for example, a business considering making a number of sales reps redundant. If these sales reps operate across multiple sites throughout the country (or are currently dispersed working from home), you may think the establishment that they work at is that location. Following this through, it would mean that only a handful of employees at that geographical site are being made redundant so there would be no need for a collective redundancy consultation.

However, recent cases have made it clear that in such circumstances the ‘establishment’ is assessed by taking into account the way in which the business is organised internally. Here, the unit to which the employees are assigned to carry out their duties might be the sales team generally and so the employees are grouped together for redundancy purposes. 

Identify the ‘affected employees’ – consider the pool, selection criteria and alternatives

Part of the redundancy process should include, where possible, offering alternative roles within the organisation. You will also need to consider whether there are any employees who are pregnant, or on maternity, adoption or shared parental leave, as special rules apply to them.

For all other employees, you should set your selection criteria in the usual way and create a pool of employees that are at risk of redundancy with the following in mind:

  • whilst you can make furloughed employees redundant, that cannot be the only reason for their selection in the pool; and
  • if an employee is on furlough because they have caring responsibilities or are shielding for health reasons, selecting them for redundancy because of this will likely be discriminatory.

Consulting with all affected workers not just those at risk of redundancy

For the purposes of a collective redundancy it is important to remember that the group with whom you consult is all ‘affected workers’. This is a wider group than just those employees at risk of redundancy.

Example of who needs to be consulted

For example, it may be that the decision has been taken to close one regional office so that all those employees are relocated or made redundant. This will change production requirements at the other offices and it may be that employees that are currently furloughed at those offices are brought back to work earlier as a result of the redundancies at this office.

Those furloughed employees are therefore ‘affected workers’ and must also be included in the consultation process, even though the consequences of the collective redundancy are ultimately beneficial to them. In practice, the furloughed employees are unlikely to complain about such changes – the burden here is the logistics of co-ordinating a consultation with a potentially very large number of employees. 

Establish ‘appropriate representatives’ 

You have a duty to consult with appropriate representatives. These are representatives for the affected workers, which, as we discussed above, can be a potentially large group of employees. Each affected worker must be represented for the collective consultation process.

There are 3 categories of representative:

  • representatives of a recognised trade union;
  • standing elected representatives – appointed generally by employees to protect their interests (for example, during annual salary reviews); and
  • directly elected representatives – elected by employees affected by this redundancy specifically for this collective consultation.

Employers must consult with a trade union representative (rather than any other representative) where the affected employees fall within a category in respect of which an independent trade union is recognised. These employees will form what is called a ‘bargaining unit’ so that their trade union representative consults for them as one group. This is not a question of whether the employees are trade union members but whether they fall within a category of employees generally for which trade union recognition has been granted by the business.

Where there is no recognised trade union, or not all affected workers fall within the bargaining unit, you must consult other ‘appropriate representatives’. If the representative is appointed generally to protect the employees’ interests (and was not specially elected for this redundancy consultation) you must ensure that the representative has been given the authority to consult on this redundancy by the employees they represent. 

Calculate the consultation period and notify BEIS of the proposed collective redundancy 

There are a couple of thresholds to be aware of, depending on the number of employees you are proposing to dismiss by reason of redundancy:

  • where between 20 and 99 employees are being made redundant within a 90-day period, the collective consultation must begin at least 30 days before the first dismissal takes effect; and
  • where 100 or more employees are being made redundant within a 90-day period, the collective consultation must begin at least 45 days before the first dismissal takes effect. 

Notwithstanding these prescribed periods the consultation must also be commenced ‘in good time’. It is worth bearing this in mind, with a number of employees on furlough (perhaps without access to the usual face-to-face meetings or appropriate technology to conduct conference calls). With these potential difficulties, employers should allow ample time for the consultation period before their intended date on which the first redundancies will take effect.

Notifying the Secretary of State

As the employer you must also notify BEIS in writing (either by letter or by submitting Form HR1) that you are planning to make collective redundancies. The notification must be submitted before the redundant employees receive their notice of dismissal and at least 30 days before that dismissal takes effect.

Provide affected employees and representatives with appropriate communication facilities 

It is a statutory requirement that representatives must have appropriate access to the affected workers. You must afford the representatives such accommodation and other facilities as may be appropriate. In practice, this means facilitating communication.

Facilitating communication for furloughed employees and remote workers 

With employees situated remotely, it is difficult to co-ordinate meetings. As the employer, you could provide telephone or video conference call facilities to enable discussion with representatives, although you should be careful that these are independent from your network so that you are not privy to discussions with affected employees. If setting up a call, ensure the representative creates and circulates the meeting login details.

One issue arising from this is data protection. To avoid the wide sharing of your employees’ personal contact information it would be better to obtain an email address (perhaps newly created) from the representatives, which is then emailed to the affected employees for them to contact the representative directly.

Given the GDPR risks and the number of affected workers likely to be involved, using informal services, such as Whatsapp messenger, is not advised.

For some businesses, it is vital to be aware that not all employees will have access to the necessary technology for digital meetings. If that is the case, you could set up telephone calls or otherwise you will need to communicate by post. You should allow for this process to take more time.

What next?

The aim of the consultation is to reach agreement on how to proceed. Assuming the redundancies are pursued, you will then need to go through the usual scoring process and conduct the required individual meetings with the employees at risk of dismissal, as with any other redundancy.

Our team understand business and they appreciate how difficult the redundancy process can be. If you need advice on urgent redundancy situations please do call us.

Alex Kennedy

After studying at Cambridge University, Alex spent 5 years with an international law firm before joining Gannons. He specialises in high-value and complex commercial disputes and employment law.

Let us take it from here

Call us on 020 7438 1060 or complete the form and one of our team will be in touch.