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Guidance on Redundancies involving Fewer than 20 Employees

Issue 33 - December 2009

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According to Tribunal Services statistics, there has been a 153% increase in the number of claims for 'failure to inform and consult on redundancies' in 2008/2009...

While this increase could well be attributed to the current economic climate which has resulted in a sharp rise in the number of people being made redundant, it is still imperative to minimise the risk in any redundancy situation.

 

With redundancies that involve fewer than 20 employees there are no specific legal obligations for employers to consult collectively with representatives or to notify the Secretary of State for the Department for Business, Enterprise and Regulatory Reform.  Neither does the law provide definitive timescales for individual consultation; in these circumstances however ‘reasonable’ consultation is required.

 

Minimising Risk

 

It is important to remember that employers proposing to make 19 or less employees redundant in one establishment could be at risk of successful unfair dismissal claims if they fail to do the following:

• Consult individually with the affected employees over the reasons for the proposed redundancy.
• Consult with individuals over the selection criteria to be used if the proposal involves a reduction in roles and if the selection criteria are determined to be subjective.
• It is found there is not a genuine need for the redundancies - therefore there has not been a cessation of business; a cessation of business at the employee’s site or a reduction or cessation of work.

Best Practice Advice

 

In terms of best practice, employers facing this type of situation are advised to do the following:

• Ensure affected employees are advised that they are ‘at risk’ of redundancy, and that this is followed up in writing.
• Consult with affected employees for at least two weeks to allow for meaningful consultation to take place. The employee must be allowed to consider and put forward any counter-proposals for consideration by the employer before final decisions are taken by the employer on the proposals.
• As part of the consultation process, information that would be provided to trade unions or employee representatives as part of a collective consultation process should be provided to individuals. This includes the reasons for the proposals and the numbers and job roles of all employees proposed to be made redundant and the method to be used for calculating redundancy payments.
• Document all consultation meetings and provide feedback to employees on suggested counter-proposals that have been put forward but are not considered viable.
• Consult with individuals on the selection criteria to be used if roles are being reduced and employees are being ‘pooled’ and also on redeployment options.
• Allow for individuals to have representatives (either a trade union representative or work colleague) at formal meetings.

Staggering Redundancies

 

Organisations should not use individual consultation as a way of staggering redundancies in an establishment.

 

For example, where 18 employees have already been made redundant following individual consultation - and it is then necessary for a further 8 employees to be placed at risk of redundancy (in the same establishment) 30 days later - it is possible to treat this situation using individual consultation.   In order to avoid any potential claim to a Tribunal using this scenario, the organisation must have clear evidence to show that these additional redundancies had not been considered earlier and the organisation has not therefore attempted to stagger the redundancies as a way of potentially avoiding collective consultation.

 

The employment risk of staggering redundancies is that both groups of employees could claim that collective consultation procedures should have been followed. Protective awards of up to 90 days’ pay for each individual could therefore be awarded by a Tribunal.

 

It is therefore important to ensure that all departments within an establishment of an organisation communicate clearly with each other if changes are planned that could result in twenty or more employees being made redundant over a period of ninety days.  Where this is the case, legal requirements relating to collective consultation will apply.

 

Further advice

 

Further information can be obtained from your HR Department in respect of managing redundancy within your organisation. For NorthgateArinso clients, our HR Outsourcing team is able to provide specific support in managing this type of situation. Please contact the NorthgateArinso HR Advice Line on 0845 073 0266 who will be happy to help with any queries.

 

References

 

ACAS booklet on Redundancy Handling

www.berr.gov.uk

CIPD fact sheet on Redundancy