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Both builders merchants Travis Perkins and travel company Eurostar have recently announced they will be cutting jobs. If the economy reacts to Brexit as some fear it will, then many more companies may have to take the unfortunate step of making redundancies.
One of the most significant obligations on employers during a redundancy process is keeping employees updated with what is happening. However, a 140% increase in redundancy claims to Employment Tribunal shows that employers are getting this wrong.
Information and consultation
The Trade Union and Labour Relations (Consolidation) Act 1992 imposes requirements on employers to keep employees ‘informed and consulted’ during a large redundancy process. A large redundancy process is classed, for these purposes, as one in which 20 or more redundancies are proposed at one establishment within a period of 90 days or less. It is not necessary that 20 people are made redundant to meet this definition, just that 20 or more are proposed.
Rules on consultation
- Who is involved? Unless representatives already exist in the organisation, employers have to arrange for an election through which a number of employees are elected to take part in consultation on behalf of the rest of the employees. This means attending meetings with the employer to be kept abreast of developments and to convey any ideas, suggestions or opinions from the employee they represent. Where a trade union agreement exists with the employer, the union must be involved in consultation.
- How long must consultation last? Where between 20 and 99 redundancies are proposed, the minimum period that consultation should last is 30 days. Where 100 or more are proposed, the minimum period is 45 days.
- What topics should be discussed? The point of consultation is for employers to reach agreement with employees on important issues, including ways of avoiding all redundancies, for example, lay off or short time working, temporary pay cuts, a cut on overtime hours etc. Topics such as selection criteria, in situations where it is proposed to make some but not all employees redundant, should also be discussed.
In addition, certain pieces of information must be provided in writing, including the reasons for the redundancies and the numbers and descriptions of employees affected.
If the obligations in the Act aren’t complied with, the Employment Tribunal can make a ‘protective’ award of up to 90 days’ pay per employee.
Smaller scale redundancies
There are no statutory rules for consultation in a redundancy exercise involving fewer than 20 proposed redundancies. However, it is still an essential element to the process and should contain the same topics of discussion and agreement. There are no minimum time periods for consultation but a good process would involve a series of meetings, usually no less than three over a time period of a few weeks.
Consultation is integral to achieving a fair dismissal and so failure to undertake a good consultation process can result in an unfair dismissal and a compensatory award at Employment Tribunal. This will apply even if there is no alternative to redundancy e.g. if the job loss is inevitable because the organisation is closing down.
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