Collective consultation on redundancy – what obligations do employers have in the UK?

When does the duty arise?

The UK legislation on group redundancies implements the EU Directive of 1998. Under the Trade Union and Labour Relations (Consolidation) Act 1992, when an employer proposes to dismiss 20 or more employees as redundant within a period of 90 days or less at one establishment, he is under a duty to collectively consult with employee representatives.

The duty is therefore triggered by the number of redundancies proposed at one establishment. The meaning of ‘establishment’ is the subject of on-going litigation which it is hoped will clarify the position. In the meantime, the current position in the UK is that an employer will be under a duty to consult if 20 or more redundancies are proposed within a 90-day period across his entire business, wherever it may be located.

The meaning of redundancy for the purposes of this duty is wider than in other UK employment legislation and covers dismissals for reasons not related to the individual employee. This would therefore include the usual redundancy situation of a disappearing job or workplace or a requirement for fewer employees to do the work available, but would also cover dismissals for refusal to accept changes to terms and conditions of employment.

Whom to consult?

The employer must consult with the “appropriate representatives” of the affected employees. Where there is a recognised trade union, the employer must consult with the trade union representatives. Alternatively, the appropriate representatives can be those specifically elected or a standing body of employee representatives authorised to consult on redundancies.

When must consultation begin?

Consultation must begin “in good time”. This term is not defined but consultation must begin within certain minimum time periods depending on the number of redundancies involved. Where between 20 and 100 redundancies are proposed, consultation must begin at least 30 days before the first redundancy takes effect – where 100 or more, at least 45 days before the first redundancy dismissal.

What is consultation?

Consultation must begin with providing the employee representatives with certain prescribed information about the redundancies. Then, as a minimum, consultation must be undertaken with a view to reaching agreement on ways and means of avoiding the dismissals, reducing the number of dismissals and mitigating their consequences. It is not sufficient for the employer to simply explain its proposals and listen to any counter-proposals.

What are the penalties for failure to consult?

Unless the very limited “special circumstances” defence should apply, if the employer fails to comply with his duty to consult, whilst the redundancies will be effective, he will be liable to pay a protective award in respect of each affected employee of up to a maximum of 90 days’ full pay.