Redundancy - consultation

Employers have a legal obligation to consult on redundancies under certain circumstances.

Redundancy - consultation

The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 legally oblige employers to consult whenever they are proposing to dismiss as redundant 20 or more employees at one establishment within a 90-day period. The term "proposing to dismiss" does not mean that an employer has to have formulated definite plans for redundancies.

Even where an employer is considering two options, only one of which involves redundancies, the obligation to consult applies. Consultation commences once the employer has adopted a specific proposal involving redundancies. It is not enough to wait until the proposals reach the stage where they could be implemented.

The term "establishment" is defined narrowly as the location where the employee works.

Where a recognised trade union is present the employer must consult with union representatives. Regulation 3 states that the employer must consult "all persons who are appropriate representatives" of any employees likely to be made redundant.

The regulations define "appropriate representatives" as recognised unions. Where no recognised union is present the employer fulfils his legal duty if "long enough before the time when the consultation is required" employees likely to be made redundant are given the opportunity to elect staff representatives. The law is silent on what happens if employees do not pursue this opportunity. The inference is that they forfeit the right to be consulted, although it could be argued this is incompatible with the purpose of the European directive.

There are explicit rules for the election, numbers and remit of non-union employee reps. These representatives could also be members of a standing body. Employee representatives elected for the purposes of redundancy consultation or for consultation involving a TUPE transfer possess statutory protection against dismissal. This protection also covers representatives and candidates for election. Employee representatives also qualify for reasonable time off and appropriate facilities to discharge their duties as reps or candidates and they are permitted access to employees.

The definition of redundancy, for consultation purposes only, differs from that described earlier. It is "a dismissal for a reason not related to the individual concerned" - an employee must be presumed to have been dismissed for redundancy "unless the contrary is proved".

At a workplace where 100 or more employees are to be made redundant then consultation must commence at least 90 days prior to the redundancies occurring. If more than 20 employees but less than 100 employees are affected then the minimum consultation period applicable is 30 days.

Consultation is not dependent on whether or not the recognised union has members involved - the employer must consult with all recognised unions.

Consultation must start in "good time" with employers required to consult on means of:

  • avoiding dismissals
  • reducing the number of planned dismissals
  • mitigating the consequences of dismissal.

During consultation the employer must take into account representations and respond to them with consultation being conducted "with a view to reaching agreement". To achieve this consultation must be meaningful and the representatives must have adequate time to consider any proposals presented to them.

Previous case law in Scotland has ruled that consultation is not automatically fair if an employer merely holds meetings with the reps.

Even if an employer reasonably believes redundancy is the only available option the obligation to consult still applies since it could be the case that the employee, unknown to the employer, might have been in possession of facts which altered the situation. Employers have an implied duty to consult with individual employees even where there is no legal obligation to consult the union or employee representatives because of the small numbers involved.

To avoid an unfair dismissal claim consultation must involve more than an employer providing a mere notification of the intention to declare redundancies.

Employees may succeed in claiming unfair dismissal if selected for redundancy without consultation unless, in exceptional cases, consultation would have proved futile. If this is the case tribunals may reduce the compensation awarded.

Other legal decisions have challenged this - a tribunal has said that an employee unfairly dismissed because of a failure to adhere to correct procedures should not have compensation reduced because the employer was unable to prove that if they had been followed the outcome would have been identical.

Another legal decision found that tribunals should consider all aspects of redundancy, including whether there was:

  • unfair selection
  • lack of consultation
  • failure to seek alternative employment in unfair dismissal on redundancy grounds cases.

As with all legal action the final decisions are never predictable and there are other examples where tribunals have ruled that, if the employer had consulted, it would have made no difference to the outcome and consequently, the tribunal may reduce the award of compensation.

There have also been instances where even when the employer has ignored the obligation to consult it was deemed that this would have made no difference and therefore there has been no unfair dismissal.

Nevertheless a tribunal can still decide to make an award to cover an additional period when the employee would have worked had proper consultation taken place.

If an employer fails to consult it is advisable to claim both redundancy and unfair dismissal.

Failure or refusal by an employer to consult under Regulation 4 allows either the union or the employee representative, depending on the circumstances, to submit a complaint to a tribunal. The tribunal can issue a protective award payable to each employee - this would apply unless the employer can demonstrate that there were special circumstances that meant it was not reasonably practicable to consult but that all reasonably practicable measures to comply were adopted.

An employer will still be responsible for paying a protective award even if the view is that consultation would have made no difference to the redundancies. The award period still applies regardless of a company entering receivership and nor does it permit the award being reduced to reflect any redundancy pay due.

These awards cannot be offset against entitlement to redundancy pay even if set above the statutory level, or any payment of wages or wages in lieu - but they can be offset against receivership.

If an employer fails to pay the award, the individuals concerned can seek redress at a tribunal, within a three-month time limit.

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