Five things employers should know about collective redundancies

Recent news stories surrounding job losses at retail giants Marks & Spencer and Tesco Direct have brought to light the issue of collective redundancies. Paul Holcroft offers an overview of what employers must be aware of.

Carrying out collective redundancies can often be an emotive and onerous matter, particularly for first-time employers.

Here are five key points that you need to be aware of.

What qualifies as collective redundancy

A collective redundancy occurs when an employer proposes to make 20 or more employees, at one establishment, redundant within a 90-day period. This will typically happen when employers need to close or relocate their business, reorganise the way the business is run, or make cost savings due to a change in customer demand. 

Consultation notice period

Employers have a duty to have a statutory collective consultation period with appropriate representatives. This is an integral part of the redundancy process and must begin early enough to allow for meaningful discussions to take place.

Legislation dictates that those looking to make between 20 to 99 redundancies must begin consultation at least 30 days before the first dismissal takes place, while those anticipating 100 or more must begin discussions at least 45 days in advance.

Consulting with representatives 

Employee representatives may already exist as part of your corporate structure, and if not, these individuals should be elected as part of the redundancy process. They will act as the voice of the wider workforce and are entitled to attend collective consultation meetings and contribute in discussing ways in which redundancies can be reduced, the selection criteria for redundancy, and the make up of redundancy packages.

Where a trade union is recognised, it should also be involved in consultation.

Notification to the government

Employers must notify the secretary of state of impending collective redundancies, so that the government may offer assistance to the employees involved.

Notification must be made 30 days before (where 20 to 99 redundancies are proposed), or 45 days before (where 100 or more redundancies are proposed) notice of dismissal is issued.

Dismissal notice

Following the consultations, a final decision should be made on the redundancies, and employees should be issued with their notice of dismissal, with the notice period being in line with contractual requirements. 

Planning ahead and promoting a practice of open communication is key to avoiding the pitfalls of collective redundancy.

However, the fact that confusion tends to arise more during less routine matters is no surprise, and in response, the government is set to release practical redundancy guidance for employers undergoing insolvency in the coming months.

About the author

By Paul Holcroft, associate director at Croner, a consultancy for HR, health and safety and reward.