Information and consultation before redundancy

An employer who is proposing to make redundancies must consult with the employees who are at risk of being dismissed.

The consultations must focus on:

• Ways of avoiding the proposed redundancies
• How the employer could reduce the number of proposed redundancies
• Mitigating the consequence of the redundancies

The employer must genuinely consult with their employees to try and reach agreement about how to avoid job losses.

Consultations should begin once an employer 'proposes' to make redundancies.

If an employer intends to make 20 or more redundancies at the same establishment over a period of 90 days or less then it must enter into 'collective consultation' with the employees' 'appropriate representatives'.

Depending on the circumstances, an employer may also need to consult with its employees on an individual basis, such as to explain an employee's personal situation having been provisionally selected for redundancy.

If an employer proposed to dismiss fewer than 20 redundancies over a 90-day period, then it must only consult with its employees on an individual basis.

Collective consultation

Who do you consult with?

You must consult with all employees who are affected:

• By the proposed redundancies
• By the measures associated with the redundancies (These will be organisational changes that are connected with or come about as a result of the redundancies, such as new technology, working hours, working systems or procedures or lines of communication/reporting.)

Note that you must consult with all the employees who are at risk of redundancy even if they are prepared to take voluntary redundancy.

Trade unions

If you recognise an independent trade union, you are required to consult with that union about any proposed redundancies, affecting the employees who fall within the job categories that the union acts for (whether or not the employee is actually member of the union).

It is possible to recognise a union without realising you have done so and without there being any formal recognition agreement. If there is a possibility that you may have inadvertently recognised a union through partaking in negotiations on previous occasions, no matter how informal, we suggest that you contact the Advisory Conciliation and Arbitration Service (Acas) (or the Labour Relations Agency (LRA) in Northern Ireland) before taking any further steps.

If there is no trade union

If there is no trade union, or if there are employees whose jobs are not covered by the activities of the trade union, then you can ask the affected employees to either:

• give authority to any representatives whom they have already elected to represent them for other matters (not relating to the redundancies) to consult on their behalf; or
• elect and appoint representatives with whom you must consult. The election process is governed by statute (section 188A of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA)) (or Article 216 of the Employment Rights (Northern Ireland) Order 1996).

Note that the choice is yours to make. You can also choose the number of representatives to be elected and whether they represent the employees as a whole or different groups or classes of employees. Generally, the majority of employers choose the latter as an employer has a duty to ensure that any elected representatives have authority to consult with them and proving this can be difficult in respect of pre-elected representatives, rather than representatives who are elected for the very purpose of consulting due to the proposed redundancies.

As the employer it is your responsibility to ensure that:

• Practical arrangements are made to ensure the election is fair
• There are a sufficient amount of representatives having taken into consideration the different groups or classes of employee affected by the proposed redundancies and that they remain elected for long enough in order to complete the consultation process
• The candidates for election come from the employees who are at risk of being made redundant
• The votes are made in secret and are counted correctly
• The elected representatives have been appointed in compliance with TULRCA (or the 1996 Order for Northern Ireland)
• The elected representatives have the authority to represent the employees

Otherwise you risk a complaint being made at an employment tribunal for a protective award – please see article below.

Notifying the Department for Business, Energy & Industrial Strategy

In any circumstances where 20 or more employees are to be made redundant, you must notify the Department for Business, Energy & Industrial Strategy (BEIS) in England and Wales, or the Department of Enterprise, Trade and Investment Statistics in Northern Ireland, using form HR1. You can download form HR1 from the Insolvency Service website, or in Northern Ireland, from DETINI.

This must be sent:

• For between 20 to 99 redundancies - at least 30 days before the first dismissal takes effect
• For 100 or more redundancies - at least 45 days (or 90 days for employers in Northern Ireland) before the first dismissal takes effect

Failing to provide the notice is a criminal offence which could result in a fine of up to £5,000.

The consultation period

Consultation must begin at the earliest opportunity and:

• At least 30 days before the first dismissal takes effect if 20 to 99 employees are to be made redundant over a 90-day period or less
• At least 45 days (or 90 days for employers in Northern Ireland) before the first dismissal takes effect if 100 or more employees are to be made redundant over a 90-day period or less

Consulting the parties

The general purpose of consultations is to investigate whether the proposed redundancies can be avoided altogether or if the numbers at risk of redundancy can be reduced in any way. Notices of termination of employment should be given after the consultations have come to an end.

You must be careful to ensure that the subject matters of the consultations are relevant to the circumstances. In the majority of cases, the consultations should include the business reasons giving rise to the proposed redundancies and should not just concentrate on the effect that the redundancies will have on the employees. However, you should also bear in mind that the proposed dismissals themselves should also be subject of the consultations and matters such as the period of time over which any dismissals will take effect, alternative work patterns or job share proposals, for example, should also be considered.

The union or employee representatives must be given the following information in writing:

• the reasons for the proposed redundancies;
• the number employees who are at risk of being dismissed;
• their general job description/title;
• the total number of employees of this description employed in the establishment;
• the proposed methods of selection and of carrying out the dismissals including the period over which the dismissals will take effect;
• the method of calculation of the redundancy payments other than those required by statute; and
• 'suitable information' about the employer's use of agency workers.

In addition, the union or employee representatives should be given a copy of the following documents:

• Form HR1
• Any documents relevant to the consultation process, such as documents that support the reasons for the redundancies

The consultation process must include consultation "with a view to reaching an agreement with the appropriate representatives" on ways of:

• Avoiding the dismissals;
• Reducing the number of employees to be dismissed; and
• Mitigating the consequences of the dismissals.

Protective awards

If an employer fails to comply with its legal obligations to provide information and/or consult with the appropriate representatives of the affected employees (those that have been dismissed, or are still employed, but are at risk of being made redundant) then they may apply to an employment tribunal for a protective award.

A protective award is a penalty which entitles an employee to be paid a week's pay for the 'protected period' up to a maximum of 90 days. The protected period begins on the date when the first dismissal takes effect or the date of the tribunal award - whichever is earlier. Note that it is not possible to offset the amount of the protective award against any salary paid during the course of the protective period.

The length of the protective period will be determined by the employment tribunal. The starting point will be to propose awarding the maximum of 90 days pay for each employee and then reduce this depending on the extent of the employer's compliance with its obligations to provide information and consult and any extenuating circumstances that may exist.

In practice, if just one employee were to successfully claim for a protective award, it is likely that the employment tribunal will then grant the same award to all the remaining employees who would also be entitled to it due to the employer's failure to consult and/or provide the requisite information. An exception to this would be if an employee is out of time to make a claim to the employment tribunal – namely if it is over 3 months since their final working day.

Individual consultations

In a situation where an employer must consult with its employees individually, it should consider the following:

• Whether the selection criteria it has used is fair and objective
• Whether the selection criteria has been fairly applied to the employees
• Whether the employees have been warned about the impending redundancies and consulted
• If there is a union – whether it has been asked for its view, such as on the selection criteria, (even though there is no obligation to consult with the union itself)
• Whether there are any alternative jobs available

Note that you must consult with all the employees who are at risk of redundancy even if they are prepared to take voluntary redundancy.

When to consult

Individual employees who are likely to be made redundant must be informed of this as soon as possible after a decision has been made to make redundancies. Consultations should then take place once the employer has decided the selection criteria (Employer obligations) it will use to choose those employees to be dismissed.

Procedure to follow

The redundancy procedure used by an employer must be reasonable and fair; otherwise you risk a claim for unfair dismissal being brought to an employment tribunal.

What amounts to a fair procedure will depend on the particular circumstances of each case; however, an employer should initially check the following before deciding which procedure to follow:

• The employee's contract and/or any staff manual/company handbook in case they set out any procedural steps that must be taken when contemplating making redundancies. An employer may be bound by contract to follow the procedure and should only depart from it if they have obtained the written agreement of the affected employees.
• Whether the employer has historically used a particular procedure, which remains fair and up to date, that should be applied to the employees. An employer can depart from using this procedure if it would be reasonable to do so.

Whichever procedure you decide to use, you should consider the following:

• Ensure that the procedure is applied consistently - otherwise you risk a claim being made against you on grounds of discrimination
• Discuss the reasons why you are considering making redundancies with the employees in case they have any ideas which may avoid or reduce the scope of the proposed redundancies
• Obtain the employees' views and feedback about the proposed selection criteria and amend it where necessary - this helps avoid any errors and may assist if you have to defend the fairness of the criteria at an employment tribunal
• Ensure that you provide each employee selected for redundancy with a copy of their score (having applied the selection criteria to them) and a breakdown of how it was calculated prior to a meeting to discuss it to help prevent a claim for unfair dismissal
• Provide all employees selected for redundancy with details of how much they will be paid on being dismissed and a breakdown of your calculations
• Look for (and keep records of all attempts to find) alternative jobs for the employees who have been chosen for redundancy within the businesses' whole group (including subsidiaries and parts of the business operating at other sites). Do not assume that the employee will not accept a demotion in order to be kept in employment. Also consider 'bumping' (Types of redundancy). Note that employees on maternity leave and paternity leave have a legal right to be prioritised (without partaking in competitive interviews) for any suitable alternative jobs ahead of other employees chosen for redundancy
• Discuss how the employee should go about organising time off so that they may look for alternative employment (if they are being made redundant)

Ensure you have a reasonable and fair appeal process in place. You should check whether the contents of the employee's appeal also amount to a grievance in which case you should follow the Acas code of practice for disciplinary and grievance procedures. In Northern Ireland, you should follow the LRA code of practice for disciplinary and grievance procedures.

See Acas's guidance on redundancy handling for more information on redundancies in England and Wales and Scotland or the LRA's advice on handling redundancy for Northern Ireland.

Consulting the parties

The consultations must focus on:

• Ways of avoiding the proposed redundancies
• How the employer could reduce the number of proposed redundancies
• Mitigating the consequence of the redundancies

An employer must genuinely consult with their employees to try and reach agreement about how to avoid job losses. Consulting after having made your mind up, and on the basis that you do not intend to change your mind, would not be regarded by an employment tribunal as genuine consultations.

Consequences of failing to consult and/or not using a fair procedure

A large majority of applications to an employment tribunal made after the dismissal of an employee on grounds of redundancy claim that the employer failed to properly consult with the employee on how to avoid job losses. This is usually accompanied by alternative claims that the procedure used as a whole was unfair or unfairly applied to the employee and that the score they were given having applied the selection criteria was unfair as compared to their peers.

You should therefore have as much documentary evidence as possible to counter the claims being made, including the following:

• Letters sent to the employee at each stage of the procedure and any documents provided to them at meetings
• Notes taken at each meeting (preferably signed by the employee and their representative)
• A written selection criteria and guide on how it should be applied
• Previous performance appraisal records and other records used as part of the selection criteria – such as attendance records

Where the circumstances permit, an employer can argue that any defects in the procedure used would have made no difference to the decision to dismiss the employee as a potential defence to reduce the amount being claimed.