Partner Sue Dowling, head of our Employment Law team, explains the need for an employer to follow Collective Redundancy Consultation legislation when seeking to make 20 or more staff redundant.
When is an employer “Proposing to Dismiss” 20 or more employees as redundant, and may have to follow the Collective Redundancy Consultation legislation?
The following gives some guidance as to the meaning of “Proposing to dismiss as redundant” for the purposes of the statutory Collective Redundancy Consultation requirements, set out in sections 188 - 193 TULCRA. Before considering the information set out in this article, you may wish first to read our first blog in this series, 'Making Multiple Redundancies – What is Collective Consultation?'
As a reminder... it is spelt out in section 188 that where an employer is "proposing to dismiss as a redundant 20 or more employees at one establishment within a period of 90 days or less", there are particular statutory requirements relating to collective consultation with appropriate representatives of the employees who may be affected.
Section 188(1A) then goes on to provide that the required consultation must being "in good time and in any event, (a) where the employer is proposing to dismiss 100 or more employees… at least 45 days, and (b) otherwise at least 30 days, before the first of the dismissals takes effect."
“Dismiss as redundant”
A crucial point to understand from the outset is that “redundant” in this context has a much wider definition, and potential application, than the “standard” definition under the Employment Rights Act 1996. “Dismiss as redundant” means a dismissal for any reason (or reasons) not related to the individual concerned”.
So where for example if an employer is proposing to implement a pay-cut across his workforce of say 150 people, and has decided that if the employees will not agree to this, he will terminate their existing employment contracts (so effect dismissals) and offer new contracts (on the reduced salary levels), such proposals to dismiss would fall within the requirements of Section 188 TULCRA.
“Proposal to Dismiss”
As TULCRA does not define what “proposing to dismiss” means, how does an employer decide that its thought and planning processes have reached the stage that triggers its statutory duty to collectively consult?
At one end of the spectrum, an employer may not be thinking of implementing redundancy dismissals at all, but is perhaps thinking of other measures that need to be taken to bring about efficiencies in the workplace. At the other end of the spectrum, an employer may be certain that multiple redundancies are unavoidable.
The task of pinpointing where in that spectrum, the thought and planning processes are sufficiently developed to amount to a “proposal” to dismiss, triggering the need to start the collective redundancy consultation process, is a difficult one – as the point will be different depending on the facts of a particular case. Certainly a “proposal” is something less than a decision already made to make dismissals; it is also clearly something more than only a remote possibility that dismissals may come about.
It might be possible to argue that there is no requirement to consult before a “strategic or commercial decision” has been taken, which has forced an employer to contemplate or plan for the possibility of multiple redundancies but the facts of the particular situation may well alter the position, resulting in the need to effect earlier, or the possibility to delay consultation until later. For example, where an employer is proposing to close a particular site which will inevitably result in collective redundancies, the employer arguably may not be under an obligation to effect statutory collective redundancy consultation (about the reasons for the closure) until there is a clear (even if provisional) intention to close rather than at any earlier point where the closure is only canvassed as a possibility.
Whilst there is European and Domestic case law which may assist in pinpointing when the obligation to collectively consult is triggered, specific legal advice should be taken regarding how the principles derived from case law may, nor may not, be relevant to your particular organisation.
You may also find our other blog articles on Collective Consultation helpful.
For further information or legal advice, please contact firstname.lastname@example.org or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.