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Managing Redundancy of 20 or More Employees - Lighter HR

Redundancy is one of the hardest actions any business owner or manager has to take.  The legal process that you need to follow has been designed to provide a structured, fair and transparent way of managing the redundancies but there are many unexpected challenges and complications 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 and we’re going to refer to this as “large-scale redundancy”.  It’s very important that employers are aware of the additional requirements that need to be adhered to in a large-scale redundancy process.

If you are conducting a redundancy process for fewer than 20 people, please refer to our guide “How to Make Someone Redundant: An In-Depth Guide for Employers“.

It’s important to note that this guide does not constitute professional advice and it does not cover everything that you could encounter during a redundancy process.  Redundancy is complicated and, what we are finding at the moment, is that many employees are being very challenging throughout the process.  The job market is tough which is meaning that employees are fighting to keep the jobs they have.  Therefore, we really do advise you to seek redundancy support before embarking on a process of any size.

We strongly advise you get in-touch with us on 0203 319 1649 to get expert, tailored guidance before you take any actions.

Large-scale Redundancy Programmes

When this guide refers to “large-scale redundancy”, we are referring to 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.

It’s very important that employers are aware of the additional requirements that need to be adhered to in a large-scale redundancy process.

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 have an obligation to 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.

The time you have for the submission of this form is determined by the number of people who may be made redundant:

  • 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

When the consultation needs to start is set out in law when 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 the individual consultation process that you must follow in every redundancy situation, you are also obligated to undertake collective consultation.  This means that you are required to consult with a group of employee representatives, or a trade union if your business recognises one, as well as with individuals.

Collective Consultations

When should collective consultation begin?

Whilst we’ve explained the timeframes that are applicable in collective consultation situations, you also need to think about when it’s appropriate to start having conversations and beginning the collective consultation process.

You are obliged to 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 disruption in the workplace by starting to talk about potential redundancies; the corollary is that it’s very important that the employee representatives have a real opportunity to influence the final decision so 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 articulate what you are proposing and why, that is likely to be a good indication that it’s time to start collective consultation.

What is collective consultation?

Collective consultation is a process whereby you consult with elected employee representatives or a trade union (for the vast majority 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 purposes (staff council, employee engagement etc.) and so can engage with these individuals for the purposes of redundancy consultation.

If you don’t have a group you can call upon, then you need to undertake an election process in order to appoint employee representatives for the purpose of redundancy consultation.

How are employee representatives for collective consultation elected?

If you don’t already have employee representatives, then you’ll need to elect them for the purposes of redundancy consultation, and you’ll do this by conducting an election process.  You need to ensure that the process is fair.

There are some clear rules on this area:

  • You need to ensure that there are a sufficient number of representatives to speak for the interests of all affected employees. You need to ensure that each of the businesses that are potentially impacted are represented and that there are sufficient representatives to enable them to feedback to the employees effectively.  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 duration of the consultation process but you may want to keep any representatives who remain employed at the end of the process in post for a longer duration so that they can continue to liaise with employees in the aftermath of the restructure.
  • Only affected employees can be employee representatives. So, if your business has 4 departments and you the 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 and you must take all reasonable steps to ensure that everyone has the opportunity to vote.

What happens once the employee representatives for collective consultation have been identified?

Once you’ve identified your employee representatives, you are obliged to ensure that they are fully aware of their responsibilities and are equipped with the skills that they need in order to be able 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 which explain the responsibilities and also have a couple of practical activities to support the individuals in developing the skills that they need to perform the role of employee representative.

What needs to be covered at the first collective consultation meeting?

Once you the representatives are trained and ready to go, you then have the first consultation meeting with them.

In this meeting you will need to be ready to share:

  • 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 and aren’t obliged to share information that is commercially sensitive.
  • Number and types of employees who are potentially at risk of redundancy – you are obliged to 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 and 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 – you will need to share the financial terms that will be offered to individuals should you need to move ahead with the redundancies. It is essential that you get these correct to ensure you manage expectations.
  • The selection process – you will need to share how you propose to select people to be made redundant.

It’s very important that you remember that nothing has been decided at this point.  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.  For the consultation to be meaningful, you need to start the process before plans are finalised and you need to be open to changing any element of what is proposed based on the feedback from the group. 

After this first meeting, it is the responsibility of the employee representatives to share the information with the rest of your employees and gather their thoughts, ideas and questions around what is being proposed.  The employee representatives are the conduit between the business and employees and keeping that two-way communication going is vital.

How often are meetings with the employee representatives during collective consultation?

There are no fixed rules on this but 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, but you may need more frequent meetings than this.

How long does collective consultation have to last?

Whilst the law is clear on the fact that collective consultation has to begin a fixed number of days before the first redundancy notice is issued, it does not stipulate how long it needs to last. 

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.

What happens if agreement is not reached with the employee representatives during collective consultation?

Consultation must be entered into “with a view to reaching agreement with appropriate representatives” but 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 but 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.

Individual Consultation during Redundancy Process

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 could commence individual consultation but clearly would not be able to bring anything to a conclusion until such time as the terms have been agreed.

If collective consultation with employee representatives is covering the proposal, selection process and terms, what’s the purpose of individual consultation?

The purpose of the individual consultation is that it gives employees the opportunity to raise issues and concerns that impact on them specifically.

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 and ask for additional information that relates to them specifically.

If you’d like help with redundancies, contact us on 0203 319 1649 or fill in the form below.

Contact Us
Employee Issues? | Our Expert HR Consultants Can Help You | Lighter HR

If you’d like help with redundancies, contact us on 0203 319 1649 or fill in the form below.

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