If you are an employer facing the need to reduce staff for reason of redundancy, then depending on the numbers involved you need to comply with a defined statutory redundancy procedure covering consultation and timescales or you could face a heavy tribunal award against you. This applies no matter how genuine and inevitable the redundancy situation actually is.
How Does the Number of Employees Matter for Redundancy Consultation?
The relevant number is the number of people you propose to dismiss, regardless of how may people you employ. The bands in question are:
- 1 -19 (inclusive)
- 20-99 (inclusive)
- 100 plus.
If you have employees at different sites, they may be capable of being treated as different “establishments” and treated on a standalone basis. So for example you could be looking at 30 redundancies but with only 15 at each of two sites, so the 1 -19 category applies with two processes run in parallel.
Redundancy Consultation Process for Less than 20 Employees
Although many sources for redundancy consultation processes often refer to ‘less than 20 employees’ technically we prefer to use the terminology ‘19 employees or fewer’ to avoid confusion when dealing with process correctly. When a company is making redundancies its important to reference the below numbers as to what rules need to be applied.
- 1-19 proposed employee dismissals
- 20-99 proposed employee dismissals
- 99+ proposed employee dismissals
Below is a breakdown of what considerations need to be made:
What is the Redundancy Consultation Period with 1 -19 Dismissals/Employees Proposed
There is no legally defined process here. However, consultation must be meaningful. You need to consult on the reason for redundancies, the selection process and possible alternatives to redundancy including alternative work. You should think in terms of weeks rather than days between announcing that there are employees “at risk” and giving any notice of dismissal. Consultation is carried out by collective meetings and individual meetings. It is normal to start with a collective meeting at which a letter is issued explaining the situation and formally notifying employees that they are at risk followed by individual meetings. Consultation is over when there is effectively nothing more on which to consult – all information has been conveyed and discussed, all employee questions have been answered and all alternatives proposed by employees have been considered and responded to. To be meaningful it must not be rushed, a bolt for the finish line carries serious risks.
What is the Redundancy Consultation Period with 20 -99 Dismissals Proposed/Employees
When the number of proposed dismissals goes above 19, the rules get rigid. Consultation has to take place with elected representatives from the affected workforce. If you have no elected representatives in place you have to invite nominations for representatives and conduct a ballot where there are more nominations than vacancies. You should take advice on getting this right.
This means that if proposing to dismiss over 19 employees you may have to announce that there will be redundancies and get the reps in place before commencing the consultation.
At the start of the consultation process you are legally obliged to submit an HR1 form to the Insolvency Service (whether insolvency is involved or not). This form, among other information, has to contain the names of the representatives.
What is the Time Period involved with 20 -99 Proposed Dismissals/Employees
No dismissal can take effect until a minimum of 30 days after the consultation starts. Consultation may end within 30 days if it is genuinely meaningfully completed, but no notice of dismissal can be given until the consultation has ended. It is very common to inform employees that there will be a minimum 30 day consultation period, to reduce the danger of an allegation of the consultation being rushed.
The Substance of Redundancy Consultation with 20 -99 Proposed Dismissals/Employees
Bear in mind that consultation is supposed to be undertaken with the purpose of reaching agreement.
The consultation will be via communication with representatives, group meetings and individual meetings. At the start of the process representatives must receive a letter setting out
- The reasons for the employer’s proposed redundancies;
- The numbers and description of employees it proposes to dismiss as redundant;
- The total number of employees of that description employed at the establishment in question;
- The proposed method of selecting the employees who may be dismissed;
- The proposed method of carrying out the dismissals, including the period over which the dismissals are to take effect;
- The proposed method of calculating the amount of any redundancy payments – other than statutory redundancy pay – to be made to employees who are dismissed.
- The number of agency workers working in the organisation and where and what they are doing
The topics that typically dominate redundancy consultation are:
- The need for redundancies
- Ways in which redundancies can be avoided
- The proposed selection methods
- Ways of preventing future redundancies for the remaining staff
You should ensure that representatives and indeed all staff have sufficient information to be able to meaningfully communicate on these areas.
When it comes down to individual consultation, people are likely to want to discuss whether their own position is genuinely redundant and where you have a scoring matrix, how their individual scores were reached.
All meetings should be minuted and all correspondence retained, because you need to be able to demonstrate that you have provided all pertinent information, answered all questions and considered all employee proposals and provided reasons for not agreeing with them if that is the case.
The end of Consultation with 20 – 99 Proposed Dismissals/Employees
When all consultation is genuinely completed you can issue notice of dismissal to the affected employees. Note that where there are 20-99 dismissals, or there were 20-99 dismissals proposed at the start of the process, the notice must not expire before 30 days has elapsed since the start of consultation. If you had a defined minimum consultation period and there are outstanding matters at the end of the period, it should be extended.
Redundancy Consultation with Over 99 Proposed Dismissals/Employees
The actual substance is the same as described above but there is an extra provision in respect of time scales.
What is the Time Period Involved with Over 99 Proposed Dismissals/Employees
If you are proposing to dismiss over 99 employees for reason of redundancy, the minimum period that applies is 45 days not 30. So no dismissal can take effect until 45 days after the consultation commences. It is normal to announce a minimum 45 day consultation period.
Other Issues in Redundancy Situations
Consultation and times scales are only one aspect of redundancy, you also need to be mindful of
- Establishing that there is a genuine redundancy situation
- Having a fair selection process
- Giving the right notice
- Making the right redundancy payment
What are Genuine Grounds for Redundancy
If it’s not a real redundancy, it’s unfair dismissal. A real redundancy is where you have business closure, site closure, less need for employees doing particular work or less needs for employees doing particular work at their location. When employees are put at risk of redundancy, whatever the numbers and whatever the circumstances, they should be given the rationale up front.
How to Conduct A Fair Redundancy Selection Process
Sometimes this takes care of itself – e.g. with site closure, or one person’s job being replaced by an automated process (albeit in the latter case there is still a need to consider re-deployment or even whether their skills are transferable to other roles and they should go in a selection pool with other employees). But where for example you have ten employees doing the same job and you only need five of them, you are probably going to need to identify selection criteria and have a scoring matrix. This is a detailed process on which advice should be taken, but to avoid claims of unfair dismissal or unlawful discrimination, criteria should be objective, transparent and relevant.
Redundancy Notice Periods
When a decision is reached that a person is to be made redundant they should be issued with a letter of dismissal for reason of redundancy. The notice to which they are entitled is either the statutory minimum or a contractual higher amount.
The statutory minimum is one week per complete year of service up to a maximum of 12. If service is 14 years or 40 years, they get 12 weeks’ notice. If service is 8 years 11 months and 27 days, they get eight weeks’ notice.
Contractual notice only kicks in where the contract gives a higher amount than statutory, or a collective agreement gives a higher amount.
How are Redundancy Payments Calculated?
Some people are entitled to what is called “enhanced redundancy” but this only applies where it says so in their contract or there is a collective agreement giving that entitlement. Otherwise, statutory redundancy applies.
Statutory redundancy is measured in terms of a week’s pay, or half a week’s pay. A week’s pay is capped at £571 in the financial year 2022/23.
The number of weeks of entitlement depends on age and length of service as below
- Half a week’s pay for each full year worked under the age of 22
- One week’s pay for each full year worked over 22 but under 41
- One and half week’s pay for each full year worked aged 41 or older
Length of service is capped at 20 years, so the most anyone can get is 30 weeks.
FAQ’s on redundancy process
The upcoming redundancies are a nailed-on certainty and cannot be avoided. All the employees know it. Do the above rules still apply?
Yes they very much do, even with site closure. You can otherwise face claims for not only unfair dismissal but also protective awards.
What is a protective award?
It is an award of compensation made by an Employment Tribunal where the obligation to consult on redundancies has arisen and not been met. It can be up to 90 days’ gross pay for each employee.
If you are looking for support in making redundancies in a correct and legal way get in touch with our Employment Law team today by calling 033 33 215005 or emailing us email@example.com