Redundancy is one of the hardest actions any business owner or manager has to take. The legal process that you need to follow ensures you follow a structured way of managing the redundancies. However, there are many unexpected challenges that can crop up along the way.
This guide focuses on the redundancy process that you need to follow when you are making more than 20 people redundant in a 90-day period at a single site. We’re going to refer to this as “large-scale redundancy”. It’s very important that you are aware of the additional requirements that you need to follow in a large-scale redundancy process.
If you are conducting a redundancy process for fewer than 20 people, please refer to our guide “Redundancy: A Detailed Guide for Employers“.
It’s important to note that this guide does not amount to professional advice. It does not cover everything that you could happen during a redundancy process. Redundancy is complicated and, what we are finding at the moment, is that many employees are being very challenging. Therefore, we really do advise you to seek redundancy support before starting.
Sections in this guide
The sections in this guide are:
- Large-scale Redundancy Programmes
- Collective Consultations
- 2a. When should collective consultation begin?
- 2b. What is collective consultation?
- 2c. How are employee representatives for collective consultation elected?
- 2d. What happens once the employee representatives for collective consultation have been identified?
- 2e. What needs to be covered at the first collective consultation meeting?
- 2f. How often are meetings with the employee representatives during collective consultation?
- 2g. How long does collective consultation have to last?
- 2h. What happens if agreement is not reached with the employee representatives during collective consultation?
- Individual Consultations
We strongly advise you get in-touch with us on 0203 146 8770 to get expert, tailored guidance before you take any actions.
1. Large-scale Redundancy Programmes
When this guide refers to “large-scale redundancy”, we are talking about the redundancy process that you need to follow when you are making more than 20 people redundant in a 90-day period at a single site.
1a. What are the main differences when you are undertaking a large-scale redundancy programme?
There are three key differences to the standard redundancy process that you need to be aware of when you are considering making 20 or more positions redundant in a 90-day period:
- Advising the authorities
- Differing time periods for consultation
- Collective as well as individual consultations
Advising the Authorities
You must inform the Redundancy Payment Services and Secretary of State of the fact that you are potentially making more than 20 people redundant. You inform them by completing an HR1 form.
To determine when to submit this form, consider the number of people who might face redundancy. The requirements are:
- For 20 to 99 employees, you have to submit the form 30 days before the first redundancy.
- For 100 or more employees, you have to submit 45 days before the first redundancy.
Differing Time Periods for Consultation
The law specifies when you need to start the consultation if you are undertaking large-scale redundancy
- If you are considering making between 20 and 99 employees redundant within a 90-day period, consultation must start a minimum of 30 days before the first redundancy.
- If you are considering making 100 or more employees redundant within a 90-day period, consultation must start a minimum of 45 days before the first redundancy.
Collective consultations as well as individual consultations
In addition to following the individual consultation process for every redundancy situation, you must also undertake collective consultation. You must consult with a group of employee representatives or a trade union (if your business recognizes one) in addition to consulting with individuals.
2. Collective Consultations
2a. When should collective consultation begin?
Whilst we’ve explained how long collective consultation needs to last, you also need to think about when it’s appropriate to begin the process.
You must start consultation when there is a business proposal on which to consult and before that business proposal has become set in stone and is a decision. This can be a difficult balance. You will want to get your thinking to a fairly advanced stage before you cause upset to your employees by starting to talk about potential redundancies. Equally, it is very important that the employee representatives have a real opportunity to influence the final decision. This means you can’t leave it too late.
There’s no fixed answer to when the collective consultation should begin. Our guidance is that when you’re comfortable that you can explain what you are proposing and why, that is likely to be a good sign that it’s time to start collective consultation.
2b. What is collective consultation?
Collective consultation is a process whereby you consult with elected employee representatives or a trade union. For most of our clients there is no union recognised so consultation will be with employee representatives. It could be that you already have employee representatives in place for other reasons (staff council, employee engagement etc.). You can engage with these individuals for redundancy consultation.
If you don’t have reps already in place, then you need to undertake an election process.
2c. How are employee representatives for collective consultation elected?
If you need to elect reps then you need to ensure that the election process is fair.
There are some clear rules on this area:
- You need to ensure that there are an enough representatives to speak for the interests of all affected employees. Ensure that all potentially impacted departments have representation. As a rough guide, you will typically look at a ratio of 1 representative to 20 impacted employees.
- You need to decide the duration for which the employee representatives will hold office. Clearly, the minimum will be for the length of the consultation process. However, you may want to keep any representatives who remain employed at the end of the process in post for longer to support ongoing communication.
- Only affected employees can be employee representatives. So, if your business has 4 departments and your proposal only impacts 2 of those departments, then the representatives must be working in one of those 2 affected departments.
- Employees can vote for as many people as there are representatives to be elected – if you need 5 reps for a department, then each employee in that department has 5 votes.
- The voting should be done in secret. You must take all reasonable steps to ensure that everyone has the opportunity to vote.
2d. What happens once the employee representatives for collective consultation have been identified?
Once you’ve identified your employee representatives, you need to ensure that they are fully aware of their responsibilities. You also need to ensure they have the skills that needed in order to fulfil the role. Typically, the way that you will discharge this responsibility is to have an initial workshop session with the representatives. We have created materials that can be used in this session. The materials explain the responsibilities and also have a couple of practical activities to support the individuals in developing the skills that they need.
2e. What needs to be covered at the first collective consultation meeting?
Once you the representatives are trained and ready to go, you have the first consultation meeting with them.
There are some key things that you need cover in the first meeting.
The Business Proposal
You need to provide the business proposal, in writing, to the representatives. You also need to provide them with as much additional information as possible to allow them to understand and feedback on the business proposal. As an example, if you are proposing a headcount reduction due to a need to reduce costs, you will need to provide the representatives with details of the cost saving that’s required, and potentially information into other costs within the business, to allow the representatives to identify other ways that savings could be made. The more information you can provide and the more collaborative you are during this process, the better. You do, of course, retain discretion regarding how much information you want to share. You don’t have to share commercially sensitive information.
Number and types of employees who are potentially at risk of redundancy
Confirm in writing the scale of the proposed redundancy and the roles that are potentially affected. You also need to provide confirmation of the number of employees who are currently performing those roles. Note: It is likely that this information will be included in your business proposal.
Ways to avoid redundancy
This is a key element of consultation. The representatives should be encouraged to bring forward ideas and suggestions as to how the redundancies could be minimised or avoided altogether.
The redundancy terms
Share the financial terms you’ll offer to individuals if you decide to proceed with the redundancies. It is essential that you get these correct to ensure you manage expectations.
The selection process
Share how you propose to select people to be made redundant.
Remember, you haven’t made any decisions yet. You are consulting with the representatives on what the business is proposing to do, why it’s proposing to do it and how it’s planning to do it. To ensure a meaningful consultation, start the process before finalizing plans and be open to modifying any proposed element based on group feedback.
After this first meeting, it is the responsibility of the employee representatives to share the information with the rest of your employees. They need to gather feedback from the employees and ideas and questions they have about what is being proposed. The employee representatives are the conduit between the business and employees and keeping that two-way communication going is vital.
2f. How often are meetings with the employee representatives during collective consultation?
There are no fixed rules on this. Remember consultation must be meaningful, so you do need to ensure that there are sufficient meetings to allow the representatives to put forward their suggestions and questions and to have those suggestions and questions answered.
We would suggest that a minimum of weekly meetings would be appropriate. However, you may need more frequent meetings than this.
2g. How long does collective consultation have to last?
While the law clearly states that collective consultation must begin a fixed number of days before issuing the first redundancy notice, it doesn’t specify the duration of the consultation.
Let’s take an example:
- You are considering making 25 people redundant and you’re ready to begin talking to your employees about the proposal.
- You elect your employee representatives and you complete their initial briefing session.
- Day 1 – you open collective consultation
- Day 7 – you have the second collective consultation meeting
- Day 14 – you have the third collective consultation meeting and the employee representatives agree that there’s nothing more to consult on: they’ve agreed the business proposal, the selection process and the terms. You can, therefore, close collective consultation. Important note: you cannot issue any redundancy notices at this time as 30 days have yet to elapse since you started collective consultation.
- Day 30 – this is the earliest date on which you can issue your first redundancy notice.
2h. What happens if agreement is not reached with the employee representatives during collective consultation?
You must initiate consultation aiming to reach an agreement with appropriate representatives. Clearly situations can arise where this simply isn’t achievable and you find yourself in deadlock.
In this scenario, you will need to make a decision and move ahead with the proposals. However, you must be able to demonstrate that you have considered the ideas and suggestions of the employee representatives and have solid business reasons as to why they are not feasible. Documentation will be everything here so be thorough in capturing information that supports your decisions.
3. Individual Consultation during Redundancy Process
3a. Is individual consultation required for redundancy if there is collective consultation?
Yes – you absolutely must still undertake individual consultation and you need to undertake this in good time.
You have a choice regarding when you start individual consultation. You can complete collective consultation first and then move to individual consultation or you can run them at the same time.
If you decide to run them at the same time, do remember that you can’t commence individual consultation until you’ve reached some level of agreement through the collective consultation process. So, it could be that your employee representatives have accepted the overall business proposal and the number of people who are going to be made redundant but you’re still consulting regarding the redundancy terms. In this scenario, you can start individual consultations, but clearly, you won’t be able to conclude anything until you agree on the terms.
3b. If collective consultation with employee representatives is covering the proposal, selection process and terms, what’s the purpose of individual consultation?
The purpose of individual consultation is that it gives employees the opportunity to raise issues that relate specifically to them.
As an example, if you’re going through a selection process, you’ll have agreed with the employee representatives how scoring will be undertaken and the criteria that will be used so this won’t form part of the individual consultation. However, through the individual consultation process, the employee will have the opportunity to challenge the scores that they have been awarded.
Manager’s Guide to Redundancies
Read our comprehensive guide to redundancies providing overview of redundancy requirements for UK employers and detailed insights into key activities and decisions.