Collective redundancies - collective consultation

If an employer intends to make 20 or more redundancies within a 90-day period, it is obliged to hold a collective consultation with the affected employees. This obligation continues to apply even if some of the affected employees subsequently decide to leave voluntarily so that their number falls below 20.

The collective redundancy periods (30 days for 20 or more redundancies and 90 days for 100 or more redundancies) are not fixed periods for consultation purposes. The employer needs to continue with the consultation process until it finishes, and this may take longer or shorter than the above periods. The employer, however, does have to wait at least 30 days (or 90 days, as appropriate) before it can make the first redundancy.

As part of the consultation process, the employer has to discuss the business reasons for making the redundancies. This means having to disclose the financial, operational or structural reasons behind its decision and, in some cases, may even require the employer to disclose some of the underlying financial or business information of the company.

The employer’s obligation to consult is with the ‘appropriate’ representatives of the affected employees. In most cases, this will be with the recognised union. If there is no union recognised, then the employer has to make arrangements for the employees to elect their own representatives, or to consult with a staff forum. It is only if the employees do not want to elect representatives that the employer can deal with them individually.

The employer must consult with a ‘view to reaching’ an agreement. This means that although it is not required to actually reach an agreement, it must ‘negotiate’ in good faith and try to do so. In practice, many employers will build concessions into the negotiations, so they can be seen to yield something.

In addition to the obligation to consult collectively, the employer also has to consult individually with each affected employee. This individual consultation will be to discuss the employee’s particular circumstances (for example, to confirm the results of any selection criteria and to give the employee an opportunity to comment).

It is not possible to circumvent the collective redundancy consultation obligations by entering into compromise agreements with the affected employees. The only way an employer can get the same result is, in effect, to make an advance pre-payment of the maximum protective award of 90 days’ pay that an Employment Tribunal can make. This payment must be made, and accepted by the employee, expressly on the basis that it is a pre-payment of the protective award if an Employment Tribunal subsequently makes one. If the employer simply pays 30 (or 90) days’ money without specifying it as a pre-payment of a protective award, this will not have the required effect of nullifying the consequences of a subsequent protective award.