Redundancy can be a difficult time for employers and employees alike. It's important for employers to approach redundancy with sensitivity and a commitment to treating employees fairly, even in challenging circumstances. Consultation is a key part of any fair redundancy process. It is therefore vital that employers considering redundancies plan how they will consult their employees about any proposed redundancies at an early stage.
What is redundancy?
Redundancy is a potentially fair reason for dismissal; and it arises when a role is no longer needed. This could be because part or all of your organisation is:
- changing the types or number of roles needed to do certain work
- changing location
If you have concerns about an employee’s conduct or performance, this is not a redundancy situation and you need to follow a disciplinary or capability procedure instead.
In addition, before even starting a redundancy consultation process, you should ensure that you have considered all available options to reduce or avoid redundancies.
For example, you could see if you can:
- offer voluntary redundancy
- change working hours
- move employees into other roles
- let go of temporary or contract workers
- limit or stop overtime
- not hire any new employees
What is the Consultation Process?
Consultation is simply when you talk and listen to affected employees about your proposals before making any decisions. You must do this before finalising any redundancies. Getting consultation right is key to ensuring that employees feel supported and listened to. If you do not hold genuine and meaningful consultation before making redundancies, employees could claim to an employment tribunal for unfair dismissal.
The purpose of the consultation stage is to encourage a discussion with the employee about why changes are required, what you plan to do, how the redundancies can be avoided or their impact mitigated, and how you can support and arrange time off for affected employees.
An employee may have suggestions on how to avoid redundancies altogether, and these should be taken seriously as they may be helpful to the process.
A good place to start when planning a consultation process is to check your workplace handbook or policies which relate to redundancy. It is also important to set out the pooling and scoring criteria at an early stage of the redundancy process so that employees (or their representatives) are involved in the discussions.
Is Collective Consultation required?
It’s crucial to consider the overall number of employees who might be at risk of redundancy at an early stage. Where 20 or more redundancies are planned, collective consultation is required, meaning you must consult with any recognised trade union or employee representative about the proposed redundancies.
If you don’t have a recognised trade union for all staff affected, then you will need to hold elections for employee representatives and won’t be able to start consultation until they are in place.
In addition, where collective consultation is required, the government’s Redundancy Payments Service (RPS) must be notified of the proposed redundancies, and failing to alert them could result in a criminal conviction and fine and significant awards for failure to consult; with each affected employee able to bring a claim for up to 13 weeks’ actual pay.
And don’t forget that even in a collective consultation situation, individual consultation about proposed redundancies with an employee about the proposals and how they impact on them is vitally important.
What happens if I don’t provide a meaningful consultation process?
The recent case of De Bank Haycocks v ADP RPO UK Ltd is an example of how failing to provide meaningful consultation at the start of a redundancy process can result in an unfair dismissal finding.
In this case, at the time of the dismissal, the employee had not been made aware of how he, or his colleagues, had been scored against the selection criteria that his employer adopted and applied. Meaningful consultation would involve a discussion about his score and how this was arrived at.
The De Bank Haycocks case reviewed the leading case law relating to redundancy consultation, and the main takeaways are as follows:
- Warn and consult either the affected employees or their representatives;
- Consult early; give the employee adequate information and enough time to respond;
- Try to reduce or avoid dismissals where possible;
- If there is an appeal to the redundancy, this may correct a missing aspect of the consultation process, but missing the consultation process entirely at a formative stage cannot be rectified on appeal, so it’s essential that this is conducted; and
- A scoring system doesn’t automatically mean it’s a fair process but, equally, not providing this isn’t essential to the process so long as it’s clear that proper and meaningful consultation has been carried out.
As an employer, you should keep communication channels open and be honest throughout the process. Clear and transparent communication helps to minimize uncertainty and anxiety among employees.
Our expert Employment Law team will guide your business through the redundancy process, advising you every step of the way.
Contact the team