For employers, redundancies are probably one of the most difficult situations to manage at work.
Sometimes, situations are beyond our control, like business losses or economic environments.
Whatever the reasons are, you need to follow legal procedures throughout these times. If not, you could end up facing unfair dismissal claims, which can cause detrimental effects on your production and brand name.
In this guide, we’ll look at what a redundancy consultation is, the different types, and how to manage them within your business.
What is a redundancy consultation?
A redundancy consultation is a meeting held for employers to discuss the changes they’re planning and why an employee may be at risk of redundancy.
These meetings allow both parties to attain all relevant information during the consultation process.
Employees have a legal right to these meetings. However, the length and number of them ultimately depend on how many redundancies will be made.
UK laws on the consultation process for redundancies
Under the Employment Rights Act 1996, redundancy is categorised as one of five legally fair reasons for dismissal. If you don’t adhere to a proper redundancy process, you may end up causing an unfair dismissal.
A common redundancy complaint raised is unfair selection criteria. To avoid redundancies which are unfair or discriminative, every employer must ensure:
- Relevant employees are aware of specific rules for the selection criteria.
- Consider alternative methods for business management.
- Allow trade union representatives to be involved.
When you inform employees from start to finish, they effectively learn about the redundancy situation in its entirety. This ensures acknowledgement for following a fair redundancy process.
What is a protective award?
A protective award is compensation given after an employer’s failure to follow an appropriate redundancy process. For example, an employer fails to consult affected employees about selection.
To receive the award, an employment tribunal will decide whether they’re entitled to it, and how much they’ll receive.
Their decision is normally based on how ‘just and equitable’ the employee was during this situation.
Individual and collective consultation
There are generally two methods for a redundancy process–individual and collective consultation.
Collective consultations are held if 20 or more redundancies will be actioned. These are generally followed by individual consultation meetings. (But each must be held separately and cannot overlap).
Individual meetings are so you can speak to staff privately and in confidence. You might hold this meeting because only one employee may be at risk of redundancy.
There are no specific collective consultation rules when less than 20 employees are involved.
There will generally be a series of meetings held before holding a final decision for redundancy.
During this time, make sure individual employees understand the reasons for their job termination. And highlight what efforts you’ve taken to explore alternative options before reaching this decision.
Remember, even after these meetings, you need to hold individual ones for all selected employees for redundancy
Collective redundancies for 20 – 99 employees
If you need to dismiss between 20 to 99 employees go, collective consultation rules are stricter.
There is no specified time limit on how long the redundancy consultation process must be. However, 30 days is set as the minimum time before you can action any form of dismissal.
Collective redundancies 100 employees for or more
In some cases, you may have to action a huge number of proposed redundancies. Maybe you’ve decided to close the business, or you cannot afford to keep a whole workforce.
Again, there is no specific time limit outlined for a redundancy consultation period here. But when 100 or more people are involved, the minimum consultation period must be at least 45 days.
Statutory redundancy payment
During this time, select employees may be entitled to statutory redundancy payments. This is only allowed for those with two or more years of work service. Although, this varies depending on individual employment contracts.
There are three factors to consider with statutory redundancy pay:
This amount is capped at £571 for any employee made redundant. Employees can only receive this amount if they were made redundant after April 2022.
Redundancy pay will also change depending on the age of the employee. For example:
- Employees under 22 years old: They will receive half a week’s pay for every full year of service completed.
- Employees between 22 to 41 years old: They will receive one week’s pay for every full year of service completed.
- Employees over 41 years old: They will receive one and a half weeks’ pay for every full year of service completed.
Length of service
Statutory redundancy pay is calculated using the following formula:
[Weekly pay (capped) X Age factor] X length of service
Remember, the maximum amount of service years is capped at 20 years.
During this time, select employees may be entitled to statutory redundancy payments.
How to manage a redundancy consultation within your workplace
Now that we’ve covered most of what proposed redundancies include, let’s look at how to manage consultations within your workplace.
Notify the Redundancy Payments Service
The first step all employers must take is they must notify the Redundancy Payments Service (RPS). This must be done before initiating any redundancy meetings.
You need to contact them within:
- 30 days for any redundancies involving 20 to 99 employees.
- 45 days for any redundancies involving over 100 employees.
The timeframe for RPS depends on how many people are at risk of redundancy. If you neglect to notify them altogether, you could face an unlimited fine.
Hold a redundancy consultation meeting
A consultation meeting is held to highlight why redundancies are taking place. These meetings allow you to answer any questions or concerns employees may have.
When it comes to proposed redundancies, consider the following:
- How many employees you’re making redundant.
- What your methods are for selecting employees.
- What alternative methods you’ve considered beforehand.
- How your business will set out to protect the remaining staff.
- How you plan to reduce redundancies in the future.
It’s advised to take meeting minutes during all discussions held. Provide written details to anyone involved and keep physical copies yourself.
Creating a paper trail allows you to present meaningful consultation meetings you’ve held with staff.
Allow employees to bring representation
Any employee involved in collective redundancies are allowed to bring elected employee representatives.
This kind of representation will vary depending on the employee’s preference. They may bring a trade union representative or a fellow colleague for support.
Employee representatives, like trade unions, must be allowed into these meetings.
However, many trade union representatives have experience with redundancy consultations. So, they might be able to reach beneficial decisions within a reasonable time. They can even speak about your professionalism at an employment tribunal (should the matter reach this far).
Decide on the final outcome
It’s so important to highlight your reasons for deciding on your outcome. Make it clear that you’ve considered other alternative employment methods–for employees and the business.
Once the consultation is completed, provide notices to select employees. The notice should outline the redundancy situation; along with end-of-contract payments and leave dates.
Do employees need to work during a redundancy consultation?
Yes, employees are expected to work during a redundancy consultation period. (Unless they have booked time off through annual leave).
You can ask employees whether they would like to work a notice period. But this falls on your own discretion.
Do you need to provide notice after a redundancy consultation?
You cannot provide notice for dismissal until the redundancy consultation period has finished.
A statutory notice period is normally given to an employee based on the following:
- One week’s notice period: For those with one week to two years’ service.
- One week’s notice period for every year: For those with two to twelve years’ service.
- Twelve weeks’ notice period: For those with over twelve years’ service. (This is the maximum notice amount).
Most employment contracts will outline whether an employee is entitled to notice following a redundancy consultation.
How long after redundancy can you rehire for the role?
There is no legal time limit on how quickly you can rehire for a previous redundant role. However, a waiting period of six months is usually good practice.
It’s not normal to hire someone for a role straight after making redundancies. This step was taken because you couldn’t foresee a better outcome. Remember if you rehire too soon, you could end up facing unfair dismissal claims.
Get expert guidance on redundancy consultations with Peninsula
In all businesses, there will be times when you need to decide to let people go.
Whether they were planned redundancies or not, they’re still notoriously complicated matters. Despite this, you need to comply with all legal obligations which surround a redundancy process.
Peninsula offers expert guidance for your redundancy consultation process. Our 24/7 HR advice is available 365 days a year; with multi-lingual support and fully trained counsellors ready to help.
Want to find out more? Book a free chat with one of our HR consultants. For further information, call 0800 028 2420