Nathan May-O'Brien is a Solicitor at specialist employment law firm, Collingwood Legal. Nathan considers recent developments impacting the law concerning redundancies.
If an employer proposes to make 20 or more employees redundant at one establishment within 90 days, they are required to “collectively consult”. This may involve consulting with an established union or electing appropriate representatives where there is no such established union. Such collective consultation often requires the employer to consult with the workforce as a “group” (through the union or representatives) in addition to individual consultation with impacted employees.
It was previously understood, however, that where fewer than 20 employees were at risk of dismissal, an employer did not need to consult with the impacted employees as a group but could instead consult with the affected employees individually. However, an Employment Appeal Tribunal (“EAT”) decision threw this into question.
EAT tips the scales
De Bank Haycocks v ADP RPO UK Ltd concerned a Claimant in a team of 16 employees. The Claimant was made redundant. The Claimant challenged the redundancy selection criteria and the lack of consultation over his scores in an unfair dismissal claim. The Claimant’s claim was unsuccessful at the Employment Tribunal, but the Claimant appealed.
The EAT allowed the Claimant’s appeal holding that there was no good reason why “general workforce consultation” about the redundancy proposal had not been carried out. It suggested general workforce consultation reflected “good industrial relations” and failure to conduct such consultation would mean any subsequent dismissal was likely unfair. The EAT found that the Claimant’s dismissal was unfair.
Court of Appeal rebalances
The Court of Appeal (“CoA”) reversed the EAT’s decision on appeal. It held that the EAT was wrong to suggest “small-scale” redundancies in non-unionised workforces required general workforce consultation as a requirement of good industrial relations. This was for several reasons including uncertainty over what a general workforce consultation would require or how such consultation would be effective when the group of employees has no representative to represent their interests.
Redefining a “small-scale”
The decision of the CoA reaffirms the previous understanding that group consultation is not required for a fair redundancy process where fewer than 20 employees are impacted at the same establishment within 90 days.
However, the Labour Government’s Employment Rights Bill proposes to make group consultation in a redundancy situation more likely. The law has historically been interpreted so that the need to collectively consult is determined by the number of employees impacted at a single workplace rather than a business as a whole. The Employment Rights Bill looks to change this so that where the numbers across a business reach 20 or more, the obligation to collectively consult will be triggered.
The impact of this proposal is that employers with multiple offices will need to ensure that they keep records of redundancies and dismissals across the business and ensure there is communication between offices so that an employer can prepare to collectively consult if necessary. The obligations in a collective consultation are more onerous than those of individual consultation and this change will mean it is more likely that these obligations are triggered.
We do not expect these proposals to come into force until 2026, but employers would be wise to prepare for this change, not least because of the proposed increase in the penalty for failure to comply from a maximum of 90 to 180 days gross pay per impacted employee.
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