Specific processes and rules apply if your business is having to make employees redundant. These specify how you should consult with workers that are affected and how long the redundancy consultation period needs to be. Get the redundancy process wrong, and as an employer you could face costly tribunal claims for unfair dismissal.
In this guide for employers, we explain the redundancy consultation period rules and what you should do to comply with your obligations when dismissing employees by redundancy.
What is the redundancy consultation period?
Employees are entitled to a consultation with their employer if they are at risk of being made redundant. The length and type of consultation depends on the number of employees affected by the redundancies:
Consultation period for 20 or fewer employees being made redundant
If there are between one and nineteen employees being made redundant, there are no specific rules on how this consultation should be carried out, except that the consultation should be “meaningful”.
In practice, this generally means that the employer should hold a consultation meeting with individual employees to explain why they are at risk of being made redundant and explore other options apart from redundancy, such as exploring options for redeployment or suitable alternative employment.
You could also consider holding a collective meeting to inform employees as a group of the redundancy process, to prepare them for the individual consultation meetings to come.
Collective consultation period for 20 – 99 employees
If there are between 20 and 99 employees being made redundant within any 90-day period at a single establishment, the rules on collective redundancies apply.
There is no time limit on how long the redundancy consultation period has to last, but as a minimum it should be 30 days before you can dismiss any employees.
Collective consultation period for more than 100 employees
If there are 100 or more employees being made redundant, the rules on collective redundancies apply and the consultation period is longer.
While there is no requirement that the redundancy consultation has to last a certain amount of time, where there are more than 100 redundancies, the period must be at least 45 days.
Giving notice following consultation
Since the law does not state how long the redundancy consultation period must last, it is possible for the consultation to finish before the end of the minimum periods as stated above.
However, you cannot give notice of dismissal to affected employees until the consultation period has genuinely finished, and statutory notice cannot end until after the minimum consultation periods have expired.
The relevant statutory notice period has to be given to each affected employee:
- If the employee has been employed for between one week and two years, then the notice period is one week.
- For between two and twelve years of employment, the notice period is one week for each complete year of employment.
- For employment over twelve years, the notice period is capped at twelve weeks.
You will need to check each employee’s contract to confirm if they are entitled contractually to enhanced notice above the statutory minimum.
For example, you are proposing to make 35 employees redundant in a 90 day period, then the consultation period must begin at least 30 days before any dismissals take effect. If the consultation is concluded in 27 days, and you are making an employee redundant who has three years of service, then they will be entitled to statutory notice of three weeks (21 days). The minimum time between the start of the consultation period and the redundancy taking effect would therefore be 48 days (27 days plus 21 days).
Where an employer fails to follow the requirements to consult where it is making twenty or more employees redundant in a 90 day period, a complaint can be made to an Employment Tribunal for a protective award. A protective award is basically a compensatory award for employees of up to 90 days’ pay. The Tribunal will decide how much to award to the employees depending on what is ‘just and equitable’ and the extent of the employer’s failure to consult.
Under the collective rules, consultation must take place between the employer and a representative. The representative can either be a trade union representative or a representative elected by the employees affected. In both cases they are entitled to time off to carry out their duties in relation to the redundancy consultation. This includes access to accommodation and facilities so that they can talk to the affected employees, and reasonable time off with pay for representatives and candidates for election to carry out their duties and to attend training to enable them to fulfil their roles.
Just because some employees are in a trade union does not mean that you have to allow a trade union representative to be the collective redundancy representative – the obligation to engage with the trade union representative is only where you formally recognise the trade union in question for collective bargaining purposes. However, trade union representatives have usually had training and can bring useful suggestions to the table, as well as showing your organisation in a co-operative light should the matter result in claims for unfair dismissal.
Information you must provide
You must provide the following information to the representative and allow them time to fully consider the details:
- Reasons for the redundancies
- How many employees are affected and in which categories do they fall, and the numbers in each of those categories
- How employees will be selected for redundancy
- How the redundancies will be carried out, for example over what period of time
- How redundancy payments will be calculated, and
- Number of agency workers working in the organisation and where and what they are doing
Notifying the Redundancy Payment Service
In some cases, the employer is under a duty to notify the Redundancy Payments Service before the start of the consultation. The deadline by which you must notify the RPS is 30 days before the first redundancy in the case of between 20 and 99 employees and 45 days before the first redundancy in the case of 100 or more redundancies. If you fail to do this by the relevant date then you may face an unlimited fine.
Lawful consultation to avoid risk of unfair dismissal
Redundancy is one of the five potentially fair reasons for the dismissal of an employee stated in the Employment Rights Act 1996. However, if you mishandle the redundancy process, your employee(s) may still have a claim for unfair dismissal against you.
A common complaint, for example, is that an employee has been unfairly selected for redundancy. This can occur when choosing the pool of employees at risk of redundancy and / or in designing the selection criteria by which the employee will be ‘scored’ and selected for dismissal. In particular, you must avoid committing unlawful discrimination during this process.
Through the consultation phase, you can help your business avoid discrimination claims in the following ways:
- By involving employees in devising the selection criteria and which criterion to prioritise in the scoring process;
- Sharing with staff what skills and experience you think will be necessary to the business going forward, and asking for their views on this question; and
- Allowing the involvement of trade union representatives.
It is important to note that any employee may make a complaint of unfair dismissal in relation to their redundancy, they do not have to have been part of a group of twenty or more employees.
How to prepare for a redundancy consultation meeting
There are two types of redundancy consultation meeting – collective and individual. Usually you would have the collective meetings first, then the individual ones, but they can overlap.
You should view both types of meetings as opportunities for your employees to feedback their ideas to you, so as to be “meaningful” in the context of the process as a whole. You should also avoid entering into the meetings with a set plan, for example, knowing in advance who you are going to pick for redundancy. This could render the process unlawful and lead to allegations of unfair dismissal.
Some organisations entering into a redundancy consultation have found that they have avoided redundancies altogether or significantly reduced the numbers, because employees have been willing to enter into other arrangements. For example, employees may agree to reduce their hours (either temporarily or permanently) or to temporary lay-offs, and you may be surprised at how many employees wish to take up redeployment opportunities.
Employees may wish to discuss:
- The selection criteria you have proposed
- Ways in which redundancies might be avoided
- How the organisation could restructure to protect staff in the future
- How to reduce the impact of the redundancies on remaining staff
The information you present to your employees should be detailed enough that the employees do not think they are being misled, but not so hard to understand that they need specialist knowledge.
It is highly advisable to have someone taking minutes at the meetings. In addition, suggestions made by employees should be noted and followed up. It is of course acceptable that you do not agree with their analyses or proposals. However, you must have a paper trail showing that you considered their ideas and why you ruled them out. The law states that the consultation must be carried out ‘with a view to reaching agreement’.
It does not state that you have to reach an agreement. The most important thing is that you can show that the consultation was meaningful.
When dealing with workforce issues such as redundancy, it is important to consider the full legal risks and the rights of your workers, as well as the human resource aspects impacting employee morale, productivity and engagement.
DavidsonMorris’ employment lawyers are on hand to help you assess the circumstances and understand the options that are in your best interests, not least to avoid unwanted tribunal claims and damage to reputation. Working closely with our HR specialists, we offer a holistic advisory and support service for employers encompassing both the legal and people management elements of redundancy and reorganisations.
As employment law specialists, we can assist if you have any queries relating to redundancy, dismissals or settlement agreements, particularly in large and complex situations. Speak to our experts today for advice.
Redundancy consultation period FAQs
Do employees have to work during redundancy consultation period?
Yes, employees do have to work during the redundancy consultation period unless they have annual leave booked. It is possible for employers to ask an employee if they can pay them in lieu of notice, or ask them to stay at home during their notice period, but both these options require agreement between employee and employer. Alternatively, there may be a clause in the employment contract which allows the employer to pay the employee in lieu of notice if the employer wants to do so.
What does consultation period mean in redundancy?
Consultation period means the period of time during which an employer must carry out a meaningful consultation with employees who are at risk of redundancy or affected by it. If an employer is proposing to make between 20 and 99 employees redundant within a 90 day period then the consultation period must start at least 30 days before any redundancies take effect.
Does notice period start after consultation period?
Yes, the statutory notice period can only start once the consultation period has genuinely completed. The consultation can finish before the end of the minimum consultation period, but the dismissal cannot take effect (i.e. the notice period come to an end) until after the expiry of the minimum consultation period.
Last updated: 2 September 2022