Collective redundancy obligations in light of P&O Ferries’ recent actions

When is collective consultation required?

Where an employer dismisses as redundant 20 or more employees at one establishment (the local unit or entity to which workers are assigned to carry out their duties) within a 90-day period, there are certain legal requirements regarding consultation that will apply.

Who should be informed and consulted with?

In a collective consultation situation, employers are obliged to inform and consult appropriate representatives of affected employees.

If the affected employees are part of a recognised trade union, the employer must consult the trade union’s representatives.

Alternatively, if the affected employees are not connected to a recognised trade union, the employer should consult with employee representatives who are directly elected by the affected employees or with any previously elected works council.

Employers are also duty bound to notify the BEID of the proposed redundancies by completing a HR1 form. Failure to do so is a criminal offence that could result in an unlimited fine.

When should redundancy consultation begin and how long should it last?

Consultation must, generally, begin ‘in good time’.

Where employers are proposing to dismiss as redundant between 20 and 99 employees, the minimum period for consultation is 30 days.

For proposed redundancies of 100 or more employees, consultation must begin at least 45 days before the first dismissal takes place.

The only defence to a failure to consult arises where special circumstances render it not reasonably practicable to consult in good time or to provide the statutory information required. In this scenario, employers must still have taken such steps towards compliance as are reasonably practicable in the circumstances.

Courts and tribunals have tended to place narrow definition on these special circumstances, ultimately making it a difficult defence to establish. For instance, in the case of Clarks of Hove -v- Bakers Union [9178] IRLR 366, the Court of Appeal considered insolvency situations. Here, the court said that if, for example, a sudden disaster struck a company making it necessary to close the concern on short or no notice, this might be capable of being a special circumstance. On the other hand, if the insolvency was due to a gradual run-down of the company, then a tribunal might decide that the circumstances were not special. Collapsed retail chain Debenhams is currently facing legal proceedings surrounding this very issue.

What needs to be included in a collective consultation?

Consultation must begin with the provision of certain information to the appropriate representatives. Under section 188(4) TULRCA employers must provide the following written information:

• The reasons for the proposed dismissals;
• The numbers and descriptions of employees who it is proposed will be dismissed as redundant;
• The total number of employees of any such description employed at the establishment in question;
• The proposed method of selecting employees who may be dismissed;
• The proposed method of carrying out the dismissals, including the period over which the dismissals are to take effect;
• The proposed method for calculating the amount of any redundancy payments to be made to those who are dismissed as redundant; and
• Information regarding the employer’s user of agency workers (including the number of agency workers used, the parts of the business where they undertake work and the type of work they are carrying out).

Following this, the consultation must be meaningful and effective. It should be undertaken with a view to reaching an agreement on ways to either avoid, reduce or mitigate the effects of dismissals. Employers should arrange meetings with the employee representatives to discuss the business rationale for the redundancies and the proposed pooling and selection methods. Employee representatives should then be given an opportunity to feedback to affected employees.

Following a period of collective consultation, employers should meet with employees individually to discuss the proposed redundancies.

Employers should also be mindful of employees who may be on maternity leave or long-term sick leave. Those employees are entitled to the same information and consultation as those employees who remain in the workforce, and reasonable adjustments to the process should be considered to enable them to properly engage.

What happens if an employer fails to comply with their redundancy duties?

Failure to properly consult and comply with the requirements of collective consultation may lead to an employment tribunal awarding affected employees a protective award, the maximum of which is up to 90 days’ gross pay for each dismissed employee.

Internal policies and practices

Beyond the collective consultation obligations, employers should be mindful of and refer back to any internal policies or procedures they have in place regarding redundancies to ensure they are fully compliant with them. Failure to comply may still lead to a claim for unfair dismissal.

As the P&O case progresses, our expert employment lawyers will bring you regular updates.