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Consultations and Compulsory Redundancies

Following on from our article ‘How to avoid compulsory redundancies’ a few months ago, unfortunately there can be instances where a business simply has no alternative but to consider cutting staff to reduce costs.

If that is the case then there are important rules that you must follow and if you fail to do so then any redundancies you may make could be unfair and you could be taken to a tribunal. You must identify which people you will make redundant and ensure you select people fairly.

Consultation

If you don’t consult employees in a redundancy situation any redundancies you make are likely to be unfair.

If you plan to make fewer than 20 redundancies then there are no set rules relating to the length of the consultation process but it is good practice to establish a redundancy procedure so that all employees are aware of it.

You must have meaningful consultation with every employee – this means meeting with all of those affected individually in private at least once. You must listen to them and consider any suggestions they make.

There are stringent rules if you intend to make more than 20 redundancies at one establishment. This is called a collective consultation.  If you intend to make between 20 and 99 redundancies in a 90 day period then the consultation must begin 30 days before the first dismissal takes place. If you intend to make more than 100 redundancies at one establishment then this period increases to 45 days.

In collective consultations you must provide additional information, including:

  • the reasons for the proposals 
  • the numbers and descriptions of employees it is proposed to dismiss as redundant 
  • the total number of employees of any such description employed at the establishment in question 
  • the way in which employees will be selected for redundancy 
  • how the dismissals are to be carried out, taking account of any agreed procedure, including the period over which the dismissals are to take effect 
  • the method of calculating the amount of redundancy payments to be made to those who are dismissed 
  • agency workers: the number of agency workers, where they are working and the type of work they are doing

Selection

The pool of employees who are at risk of redundancy may usually seem obvious. For example, if you are a manufacturing business and work has declined, then it is likely to be shop floor machine operators who make up the pool. If there is a business need to retain skilled staff then you may widen the pool to include lower level staff.

Once you have identified a pool decide how to fairly and objectively decide between them. Draw up a list of criteria. Example criteria will include absence, disciplinary record, performance and skills, experience and qualifications. Make sure you can demonstrate that the selection process is fair. Fairly score your employees and do not discriminate against anyone.

Notice and Pay

Once you have completed your selection process and identified which employees have been selected for redundancy you must notify those affected, giving them the correct notice terminating their employment. Statutory notice periods are one week if the employee has been employed for more than one month but less than 2 years, and then one week for each year of employment if the employee has been continuously employed for 2 years or more, up to a maximum of 12 weeks.  If the employee has contractual notice that is more beneficial than statutory notice or vice versa then you must give the longer notice period.

Employees with 2 years or more continuous employment also qualify for statutory redundancy pay. This is calculated at 0.5 weeks pay for each full year of service while they were under 22, one weeks pay for each years service between the age of 22 and 41 and 1.5 weeks pay for each full years service over the age of 41, subject to a maximum of 30 weeks. A full weeks pay is also subject to a statutory cap.

Finally, remember that during the notice period, employees with two years service or more by the time their notice ends, are entitled to reasonable time off to seek alternative employment.

This article was written as part of a series following the collapse of Carillion, to see the complete collection please click here

If you require further advice on consultations and compulsory redundancies then please contact Richard Newstead at SCE Solicitors on 0113 350 4030 or at hello@scesolicitors.co.uk.

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SCE Solicitors is a boutique employment law practice based in Leeds which advises clients nationwide.  Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

Richard Newstead

Richard qualified as a Legal Executive over 20 years ago and has significant experience in Employment law and Litigation.

Richard acts for both employers and employees drafting and advising on settlement agreements, contracts of employment, consultancy agreements, directors service agreements and general workplace policies. He acts for commercial clients in the employment tribunal dealing with unfair dismissals, constructive dismissals and claims for discrimination.
Richard Newstead

Latest posts by Richard Newstead (see all)

Richard Newstead

Richard qualified as a Legal Executive over 20 years ago and has significant experience in Employment law and Litigation. Richard acts for both employers and employees drafting and advising on settlement agreements, contracts of employment, consultancy agreements, directors service agreements and general workplace policies. He acts for commercial clients in the employment tribunal dealing with unfair dismissals, constructive dismissals and claims for discrimination.

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