Collective Redundancy
Redundancy for 20 or More Employees
Collective Redundancy
The procedural requirements for making redundancies differ depending on the number of employees to be dismissed by reason of redundancy. Where less than 20 employees at one establishment are to be dismissed by reason of redundancy within 90 days or less, this is known as “individual redundancy”. Where there are 20 or more employees to be made redundant at one establishment within 90 days or less, this is known as a “collective redundancy” situation and the statutory collective consultation procedure set out at s.188 TULRCA 1992 applies.
Collective consultation
Section 188 TULRCA sets out the requirements of an employer to engage in collective consultation with a trade union or (if no union is recognised) elected employee representatives, where there is a proposal to dismiss as redundant 20 or more employees at one establishment within a 90-day period.
Consultation obligations extend to employees who are likely to be dismissed and to those affected by proposed dismissals (e.g. employees who are not at risk of redundancy but who experience a change in their working conditions as a result of the redundancies).
In the case of USDAW v Ethel Austin Ltd (in administration) and another (C-80/14) (the ‘Woolworths’ case), the ECJ clarified that the words ‘at one establishment’ should be interpreted as the local unit or entity to which the redundant employees are assigned to carry out their duties (as opposed to the employer as a whole). This is useful guidance for employers with many branches.
Consultation obligations extend to employees who are likely to be dismissed and to those affected by proposed dismissals, or who may be affected. Employers must:
consult with trade union representatives, if a trade union is recognised by the description of employees affected; or
consult with employee representatives elected in accordance with a detailed procedure set out under s.188A, if no trade union is recognised (s.188(1B)).
Consolation Process
Consultation must begin “in good time” and in any event at least 30 days before the dismissals take effect if between 20 and 99 redundancies are proposed at one establishment. If 100 or more employees are to be made redundant at one establishment then the consultation must begin at least 90 days before the first dismissal takes effect (see s.188(1A)).
The 30 or 90 days’ consultation must be completed before giving notice to terminate an employee's contract of employment. A notice of dismissal given during the consultation period will therefore be invalid even if it expires after the end of that period (Junk v Wolfgang Kuhnel, ECJ 2005 case C-188/03 27.01.05).
Consultation should concentrate on:
avoiding the dismissals altogether; and
if this is not possible, reducing the numbers of employees to be dismissed; and
mitigating the consequences of the dismissals. (s.188(2)).
In order for effective consultation to take place, the employer must provide the representatives with the information set out in s.188(4):
Reasons for the proposals;
Numbers and descriptions of employees whom it is proposed to dismiss as redundant;
Total number of such description employed;
Proposed method of selection;
Proposed method of carrying out the dismissals (with due regard to any agreed procedure); and
Proposals for calculating any payments.
Notification to the Department for Business, Innovation and Skills ("BIS")
The employer must give BIS at least 30 days’ notice if 20 or more redundancies are proposed at one establishment within 90 days or less. At least 90 days’ notice is required if 100 or more redundancies are proposed at one establishment. The notice must be given at least 30/90 days (as appropriate) before giving notice to terminate an employee's contract of employment. This point has been clarified by the Collective Redundancies (Amendment) Regulations 2006, SI 2006/2387. The notice must be given on the Redundancy Payments Form HR1 which must be submitted to the appropriate redundancy payments office. It is a criminal offence for an employer to fail to notify the Secretary of State in advance of such larger scale redundancies (see s.194 TULRCA 1992).