Many organisations will have been hit extremely hard by the impact of the coronavirus and the measures taken by the Government to combat its spread.
Employers will be continuing to consider the options open to them in terms of reducing labour costs in order to survive. These will include considering whether they can lay off employees or seek to furlough them under the Government’s new scheme, considering amendments to contracts such as reduced hours or wage cuts as well as, as a last resort, making redundancies.
Below, we have considered the requirements to conduct collective consultation where large numbers of redundancies are contemplated.
What are the collective consultation requirements?
If an employer proposes redundancies of 20 or more employees at one establishment within 90 days or less, under section 188 of Trade Union and Labour Relations (Consolidation) Act 1992 an employer has a duty to inform and consult with the representatives of its affected employees. This includes the affected employees’ recognised Trade Union representative or if no Trade Union is recognised, their elected employee representatives. If the organisation does not have a recognised Trade Union or staff body to consult with, they will need to organise elections for employee representatives.
The length of the consultation period depends on the number of redundancies anticipated. Between 20 and 99 redundancies will require a minimum 30 day consultation period. More than 100 redundancies will require a minimum 45 day consultation period.
Employers must also notify the Government of their redundancy plans using form HR1.
Purpose of consultation
A fair consultation should be conducted with a view to reaching an agreement on ways to avoid dismissals, reducing the number of employees to be dismissed and mitigating the consequences of the dismissals. This would usually include:
- The provision of adequate information;
- The provision of adequate time to respond; and
- Allowing the affected employees and their representatives’ opportunity to express their views on the proposals.
Failure to comply could make it harder for the employer to defend any unfair dismissal claims and risks further claims of failure to inform and consult – where employers could be ordered to pay protective awards of up to 90 days’ pay per employee.
Special circumstances defence
However, there is a special circumstances defence available to employers who can show that it was not reasonably practicable to consult for the minimum period, but that the employer has taken reasonable steps to consult.
This defence will not excuse an employer who does nothing but will allow a shorter consultation period where it is not reasonably practicable to consult for the full 30 or 45 day period. Employers seeking to rely on this defence will still need to show that they allowed affected employees to elect representatives (if there was no recognised trade union to consult with) and conducted some consultation.
Based on case law, the circumstances will need to be extraordinary. This could be possible for some businesses to argue given the sudden and unforeseen impact of the coronavirus. However, employers will also now need to show that they considered furloughing employees during any period of consultation as an alternative to cutting short the consultation period.
The requirements to conduct collective consultation do not replace the requirements to consult with individuals directly. These should also be complied with to avoid any claims of unfair dismissal from individuals that are dismissed.
Employers who think they might need to undertake a redundancy programme should take legal advice early to help prepare a timeline of steps to take to ensure compliance.
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