Partner Sue Dowling, head of our Employment Law team, looks at the potential implications for employers who fail to collectively consult with employees when making multiple redundancies.
As a reminder… “where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, statutory collective consultation requirements are triggered.”The required consultation (with “appropriate representatives”) must be “in good time and in any event - where the employer is proposing to dismiss 100 or more employees… at least 45 days, and otherwise at least 30 days – before any dismissal takes effect (Section 188 - 194 Trade Union & Labour Relations (Consolidation) Act 1992 (TULRCA).”
This blog article, part of a series of six on Collective Consultation, will look at:
- What the possible financial implications will be for an employer who fails to fully comply with a duty to collectively consult pursuant to the above Statute;
- Whether there are any exceptions and/or defences which may assist an Employer.
The provisions of TULRCA are complex and the following guidance should not be used as a substitute for taking specific legal advice, particularly as the precise application of the statutory requirements in practice will invariably depend on the circumstances facing a particular employer and the nature of its workforce.
What are the possible financial implications for an employer who fails to fully comply with a duty to collectively consult?
Where an employer fails to comply with its statutory obligation to collectively consult, claims can be made to the Employment Tribunal – the claim relating a failure relating to the election/appointment of A-Reps and/or relating to a failure to inform and consult as required by TULCRA. In broad terms Tribunal Proceedings must be issued before the last of the proposed dismissals is implemented or within 3 months starting with the day on which the last dismissal occurs. Also, depending on the nature of the claim, only certain people have the ability to sue. For example, where the claim relates to a failure to arrange an election of A-Reps (or to follow the stipulated rules on elections), a claim can be brought by any of the individual affected/dismissed employees. In contrast, where the claims relate to a failure to inform or consult with duly elected A-Reps, these can (generally) only be commenced by an A-Rep (which may be a Trade Union).
Where a Tribunal upholds a claim, it may (in addition to making a declaration) make a “protective award” which is an award to one or more descriptions of employees who have been dismissed as redundant, or whom it is proposed to dismiss as redundant, and in respect of whom the employer has not properly consulted, as per the statutory requirements. As the A-Reps may be representing a substantial number of employees, by issuing proceedings, it follows that a substantial number of awards can result – the Tribunal essentially ordering the employer to pay remuneration to the employees for a “protected period”. This period starts with the date on which the first of the dismissals to which the complaint relates takes effect (or the date of the award itself, whichever is earlier), and finishes after a period determined at the Tribunal’s discretion (accordingly to what the Tribunal considers “just and equitable in all the circumstances having regard to the seriousness of the employer’s default”) but the maximum “protected period” is 90 days.
As an employee is entitled to a “week’s pay” for each week of the “protected period” (and a proportional amount for any part-week) , in cases where there has been a complete failure to consult, the employer could face paying at an award of roughly three months’ gross pay to a large number of employees dismissed through the exercise. Note: actual pay is taken for this calculation, rather than the capped ‘week’s pay’ used for example in the calculation of statutory redundancy pay or the basic award for unfair dismissal.
It is important to appreciate that the protective award is intended to punish the employer for not complying with its collective consultation obligations. Unlike most awards in the Tribunal, it is not an award to compensate a particular affected employee for their individual financial loss. This therefore means that receipt of wages during the protected period will not reduce that employee’s award.
Possible exceptions and defences:
Where employees fail to elect representatives
Where the employer has invited the affected employees to elect A-Reps, and they fail to do so within a reasonable time, the employer is released from the obligation to collectively consult. The employer’s only obligation in these circumstances is to give each affected employee the required information instead.
The “special circumstances” defence
In some limited, exceptional situations, employers may be able to take advantage of a limited exception to the obligation to collectively consult. The exception is limited because it does not apply to all of the obligations under section 188 of TULRCA, nor does it necessarily remove those obligations entirely.
The defence applies where there are “special circumstances which render it not reasonably practicable” for the employer to fully comply with certain (limited) requirements, but where the employer has still taken such steps as are reasonably practicable – i.e. essentially where (in special circumstances) the employer has done its best. The application of the law will turn on the facts of the particular case but in a number of instances, it has been applied robustly in this area, leaving the employer unable to rely on the defence. Thus specific legal advice should be sought by an employer if faced with a situation of potentially needing to rely on this statutory defence (down the line) with a view to avoiding liability for failure to comply with (the relevant provisions in) section 188.
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.