Redundancy consultation

If you’re thinking about making redundancies, then you’re in good hands with The HR Dept.

What is redundancy consultation?

A redundancy consultation is a necessary part of any fair dismissal or redundancy process. It aims to ensure there is a genuine exchange of views and information between employers and employees with regard to why redundancies are being proposed and whether they can be avoided.

The consultation will discuss, why the proposed redundancies are necessary, and any steps taken to avoid them, who is likely to be affected, how the business would select staff for redundancies, any concerns employees may have and how they will be supported.

The length of a redundancy consultation will vary depending on how many redundancies an employer is planning to make. If it is between 20 and 99 redundancies, the consultation must start at least 30 days before any dismissals take effect. This period increases to at least 45 days if it is more than 100.

An employee’s notice period begins the day after an employer has notified them of their redundancy. This period will vary depending on how long an employee has worked for you or their contractual term. Less than one month requires no statutory notice, while 1 month – 2 years requires 1 week, 2 to 12 years requires 1 week for each complete year they have worked, and 12 years or more requires 12 weeks’ notice.

Employees that have worked for their employer for 2 years or more will usually be entitled to statutory redundancy pay. This will amount to half a week’s pay for each full year they were under 22, one week’s pay for each full year they were between 22 and 41, and one-and-a-half week’s pay for each full year they were older than 40. Length of service is capped at 20 years.

Employees are not entitled to statutory redundancy pay if their employer offers to keep them on or offers a suitable alternative role that they do not accept without good reason. However, employees do have the right to take reasonable time off to look for a new job or arrange training during this period.

A case for redundancies

Prepare your business case for staff redundancy. If it is to save money, itemise the savings you have already made before starting the redundancy process. Can you continue to use the furlough scheme or create alternative jobs before resulting in redundancies?

If you have considered the alternatives and concluded that redundancies are unavoidable, it is essential to seek professional advice.

Redundancy rules are complex and there are some additional considerations to remain aware of if you are currently claiming through the coronavirus job retention scheme.

We understand that every situation is different. Our HR professionals can work with your business to design a solution that effectively manages your redundancy process.

Following a fair and legal redundancy process

The most important part of any company redundancy process is that you end up with the best staff to take your business forward, and that any departing staff are treated fairly and leave the company with their dignity intact.

You will need to be careful around notice periods, pay entitlements and selection criteria. Getting this wrong can lead to an employee bringing a tribunal case against you for unfair dismissal.

To avoid discrimination, make sure all staff are included in the redundancy process, especially those on long-term sickness absence or maternity leave, although these groups do have additional protection.
Identify a potential selection pool. Then ensure your selection criteria is fair and score each person as objectively as you can.

What is collective consultation?

A collective consultation is the joint process by which employers and employee representatives discuss with a view to reaching an agreement whether there are any ways redundancies can be avoided or reduced and how the consequences of redundancies can be mitigated.

It is a legal requirement to hold collective consultations if an employer is planning to make more than 20 people redundant within a 90-day period. The consultation needs to begin at least 30 or 45 days before the first dismissal takes place.

Employers must notify the Redundancy Payments Service before a consultation can start. Then they can begin consultations with trade union representatives. If no trade union is recognised, the consultation must take place with elected employee representatives. Employers are required to give written information about the planned redundancies to these parties.

At the end of the consultation period, employers must then issue termination notices to affected employees showing the agreed leaving date. Redundancy notices can only be issued when the consultation process is complete.

Employees can file for protective award claims if an employer fails to follow the collective consultation rules and process correctly. If successful, employers may be required to pay 90 days’ gross pay per affected employee.

The Secretary of State for Business, innovation and Skills must also be notified at least 30 or 45 days in advance of the first dismissal taking place. Failure to do so is a criminal offence and can result in an employer receiving an unlimited fine.

Information you must provide to your staff or representatives

It is important to provide as much information as possible to the elected representatives or employees so that the consultation is productive.

As a minimum, employers must provide written details about why they are making the redundancies, how many people it will affect and from which parts of the business, their criteria for selecting who to make redundant, how they will work out payments, what process they will follow, and any suitable information about its use of agency workers. Employers have a duty to respond to any other requests for clarification or further information from employee representatives.

Employers can consult with individual employees at risk of redundancy during the collective consultation process but not before. Similar to the collective consultation, affected employees should also receive relevant information about the proposed changes – including the business rationale for proposing redundancies, a copy of any presentation slides and a Q&A document.

During this period, it is an employer’s duty to answer any questions affected employees have and discuss all options available to them. This might include whether there are any ways to mitigate the redundancy or if there are opportunities for alternative employment.

Up next read more about dismissals

Redundancy Consultation FAQ

How do I identify who is at risk of redundancy and what is a “selection pool”?

When faced with making redundancies, it is crucially important that employers carry out these procedures fairly to make sure no claims are brought against them.

To do this, employers will usually form a number of selection pools that will help them to identify employees at risk of redundancy. While employers have a lot of freedom in choosing these pools, they need to be considered fair and reasonable.

When determining selection pools, employers should consider the extent to which employees are doing similar work, the extent to which employees’ jobs are interchangeable, and what type of work is ceasing or diminishing.

Employers can then use selection criteria to choose which employees to make redundant from these pools. This is usually based on factors such as performance, length of service and attendance and disciplinary records.

Employers cannot use selection criteria for redundancy based on an employee’s age, race, religion, disability or whether they are pregnant. This is illegal and would automatically be considered as unfair dismissal.

How long after redundancy can you recruit?

While there is no legally-binding time period before you can rehire for a redundant role, employers should wait at least six months to recruit into a role they have made redundant. If your business has taken the difficult decision to make a role redundant, it is usually because you cannot see your business situation changing in the foreseeable future. This period is widely accepted as being six months.

Employers are also more likely to find themselves at risk of an unfair dismissal claim if they rehire for the role they made redundant too soon. In this instance an employer will need to prove the original redundancy was genuine, unavoidable at the time and that the financial prospects of the business have changed significantly since then.

What do you say in a redundancy consultation?

As an employer you must explain the business case and how the proposals could affect the individual employee’s role and what options are available to them.

You should let them know how the redundancy process will work, when the consultation period will end and when the proposed changes will likely affect their role. It is also important to let your employee know what support is available to them, such as help with their CV, training and financial advice.

This is also a chance for employees to ask questions and raise objections. Employees will likely want to know how selection pools have been identified, whether they have been fairly selected and whether their employer has considered alternatives to redundancy. It is your duty as an employer to address those questions and concerns.

How do you make one person redundant?

Making one person redundant still requires a formal process. The same rules for consultation apply however there is no strict timetable.

As an employer you will need to prove the redundancy is genuine and that you are not using redundancy as an excuse to dismiss an unwanted or underperforming employee.

How to prepare for a consultation?

Preparation and planning are key to the consultation process. You will need to be able to explain in depth the business case for making redundancies and be able to answer important questions such as why? why now? what is the business hoping to achieve by making redundancies and what alternatives have been considered?

You will also need to know how you will decide the criteria for selecting employees for redundancy, how long the decision will take, and have a clear idea of the kinds of skills and experience your business needs for the future.

What is the redundancy consultation process/ flowchart?

This is the steps that the company will need to take during the process. It will vary for each company depending on the number of employees at risk and the reasons for the proposal.

When to begin your consultation?

While there is no time limit for the redundancy consultation to take place, there are legal requirements with regard to the minimum time allowed between when the process begins and when the first dismissal takes place. If you are making between 20 and 99 redundancies, the consultation needs to begin at least 30 days before the first dismissal takes place. If you are making more than 100 redundancies, the consultation must begin 45 days before any dismissals take effect. There is no minimum consultation period for businesses making fewer than 20 redundancies.

How do you tell staff they are being made redundant?

Consider the logistics of the redundancy consultation if staff are working remotely. For example, is adequate support available to protect their well-being?

Start consulting in good time with all the affected employees (and if there is trade union recognition in place, consult the trade union representatives) If over 20 twenty staff are at risk, consult with their elected representatives/trade union representatives and listen to their ideas and suggestions. AN HR 1 form must be completed as well.

Always remember it is the job that is being made redundant not the person but for the individual it is their livelihood. So give as much information as you can and listen to their concerns.

How much notice must be given for redundancy?

Consulting about proposed redundancies must start as early as possible before final decisions are made. The minimum redundancy consultation period depends on the number of staff involved. For example, if 20 to 99 employees are at risk, there is a 30-day consultation period before the first notice can be given. It is important to keep this timeframe in mind with the job retention scheme closing at the end of October.

Redundancy aftercare matters

Our outplacement package can help employers to support those that they are making redundant by offering crucial advice with their next career move. This can be invaluable given the current climate and includes services such as interview skills, CV screening and career coaching.

Once the redundancy consultation process is over, keep remaining staff motivated by informing them that you intend to keep them in your employment. Team building activities can help to avoid survivor guilt amongst those who are still working for your business.

Every business situation is different. You really need objective, business focused advice to help navigate the rules of the redundancy process correctly.

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