Redundancy During Coronavirus: Part 1: How Do I Deal With Collective Consultation?, 21 April 2020
At present the funding by the Government under the Job Retention Scheme is only set to last until the end of June. Inevitably, even once the current lockdown is lifted there will be a reduced need for some business services and some employers may require to look at making redundancies if they can no longer afford to pay staff (or if they no longer require the same staffing levels) and the Government funding is no longer available. It is important that employers are aware of the correct redundancy process to follow in order to avoid or minimise unfair dismissal claims.
Definition of redundancy
Before an employer can consider redundancies, the statutory test must be met. An employee can be dismissed by reason of redundancy if the one of the following applies:
- The employer ceases, or intends to cease, to carry on business
- The employer intends to close the site at which the employee works
- There is a reduced requirement in the business for employees to continue to carry out work of a particular kind
Whilst there is no statutory procedure where fewer than 20 redundancies are planned, it is important to follow a fair procedure and consult fully with affected employees and their representatives.
Employees should be given fair warning of any planned redundancies and invited to consultation meetings to discuss the proposals. Employees should also be provided with adequate time and opportunity to respond to the proposals. There is no prescribed timescale for individual consultation however, case law suggests that 7 days would be an adequate consultation period as a bare minimum. Typically this would involve at least two individual consultation meetings with each employee.
Example: Bedrock Bakery employs 20 members of staff. They propose to make 5 employees redundant as there is currently a reduced service requirement at the bakery and they need to reduce the number of bakers in the kitchen (my next blog in this series will take a closer look at how to select those who are at risk of redundancy – known as the pool for selection). Bedrock Bakery will require to individually consult with the employees who are in the role of ‘baker’ who are at risk of redundancy. Ideally Bedrock Bakery will hold two individual meetings with the employees to discuss the proposals and hear the employees’ views on the matter. As a minimum they should consult for 7 days then provide the individuals with a note of their decision.
Where an employer proposes to make 20 or more redundancies within a 90-day period, at one establishment, the employer will have to engage in collective consultation with a trade union or elected employee representatives of the affected employees and also notify the Department for Business, Energy and Industrial Strategy (“BEIS”). If no such representatives are in place, part of this process involves facilitating an election to appoint representatives.
Consultation must be completed over a reasonable amount of time. Where fewer than 100 redundancies are proposed, consultation must begin at least 30 days prior to the first dismissal taking place. Where 100 or more redundancies are proposed, the minimum consultation period is 45 days.
The consultation process must be undertaken with the aim to reach an agreement on ways to avoid or reduce the number of dismissals and mitigate their consequences.
Example – Bedrock Bakery employs 100 staff members across their sites in Scotland and proposes to make 50 members of staff redundant within the next 90 days as they intend to close a number of their sites.
Step 1 – Bedrock Bakery need to determine how they should consult with employees. In this scenario as they are proposing more that 20 redundancies they will require to collectively consult. As they are proposing less than 100 redundancies the minimum consultation period is 30 days. They will need to identify which establishments (i.e. which of their bakeries) they are making 20 or more redundancies at. For example, if they are making 19 redundancies each, at 4 different shops all over Scotland, they might not need to worry about collective consultation. If however, there are 20 or more at any establishment, then the collective rules will be engaged.
Step 2 – Bedrock Bakery should look to see if there is a recognised trade union to represent the affected employees and, if not, allow employees to elect employee representatives (if there is not an existing employee representative body). They should also notify BEIS of the proposed redundancies.
Step 3 – Bedrock Bakery should provide representatives with information in relation to the proposals including: the reasons for the proposed dismissals, the number of and type of employees that are at risk (ie. what sites are being closed), the proposed method of selecting employees to be dismissed and the proposed calculation of redundancy payment. The representatives should then be given the opportunity to consider and respond to the proposals.
Step 4 – Bedrock Bakery should attempt to come to an agreement with the representatives regarding the proposals and exhaust all possibilities for agreement. If they are unable to come to an agreement within the minimum time period of 30 days, they may cease the consultation exercise and begin to implement the redundancy proposals.
It is important that employers take the time to ensure that they follow the correct fair procedure as, if they do not do this, they put themselves at risk of having to pay out further substantial sums of money if the Employment Tribunal later finds that there has been an unfair dismissal. In addition to unfair dismissal, employees can claim protective awards of 90 days pay per employee, for a failure to collectively consult.
If employers are considering making redundancy proposals and would like further advice on how to do this then please get in touch with the Blackadders Employment Team to discuss.
Fiona Knox, Trainee Solicitor
In this section
- General Guidelines
- UK government: Government launches £200m funding for sustainable COVID-19 Business Recovery, 27 June 2020
- Scottish Government: Lockdown begins to ease in Phase 1, 28 May 2020
- Scottish Government: COVID-19 Budget Revision, 27 May 2020
- Scottish Government: Sector Guidance for Easing Lockdown, 26 May 2020
- Scottish Government: COVID-19 Funding Plea, 23 May 2020
- Scottish Government: Expansion of COVID-19 Testing, 18 May 2020
- Data Protection and Privacy During the Coronavirus Pandemic
- Scottish Government: Second Coronavirus (Scotland) Bill, 11 May 2020
- Scottish Government: SME Support Doubles to £90 million, 8 May 2020
- Redundancy during Coronavirus Part 4: How do I calculate redundancy payments?
- Redundancy during Coronavirus: Part 3: How do I consult with employees who are risk of redundancy?
- Scottish Government: Emergency Loan Fund for SME House Builders, 7 May 2020
- UK Government: Business Rates Revaluation Postponed, 6 May 2020
- Scottish Government: New Powers over CAP, 5 May 2020
- Scottish Government: Preparing for Economic Recovery, 5 May 2020
- Uk Government: Self Employed Invited to Get Ready to Make Their Claims for COVID-19 Support, 4 May 2020
- UK Governement: Funding five new testing facilities in Scotland, including Perth, 29 April 2020
- Scottish Government: Rapid Coronavirus Research. More than 50 Scottish Studies to Tackle Virus and its Impact, 28 April 2020
- Scottish Government: Securing Vital COVID-19 Supplies for Scotland, 24 April 2020
- Coronavirus Business Interruption Loan Scheme Update and New Support for Smaller Businesses
- Aberdein Considine: View the latest response to Coronavarius
- Redundancy During Coronavirus: Part 2: How Do I Select Employees for Redundancy? 23 April 2020
- Scottish Government: Lifeline Support for Business Confirmed, 21 April 2020
- Scottish Government: Universal Credit. People Being Urged To Access All Support, 21 April 2020
- Scottish Government: COVID-19 Impact on Scotland's Economy, 21 April 2020
- Redundancy During Coronavirus: Part 1: How Do I Deal With Collective Consultation?, 21 April 2020
- Scottish Government: Call for Accelerated Business Support, 21 April 2020
- UK Government: Billion £ Support Package for Innovative Firms hit by COVID-19, 20 April 2020
- Scottish Government: Extend Brexit Transition during COVID-19 crisis, 20 April 2020
- Scottish Government: Advisory Group on Economic Recovery, 17 April 2020
- Scottish Government: Thousands of Businesses Benefit from Support Grants, 17 April 2020
- UK Government: Chancellor extends furlough scheme to end of June, 17 April 2020
- What Coronavirus Act means for Commerical Landlords
- UK Government: Universal Credit claimants to verify identity through Government Gateway, 16 April 2020
- UK Government: Councils given greater financial relief against cash flow pressures, 16 April 2020
- Scottish Government: Additional Support for Business, including additional £100m for Self-Employed, 15 April 2020
- UK Government: Magnox donates 66,000 items of PPE to support coronavirus response, 15 April 2020
- UK Government: Furlough scheme cut-off date extended to 19 March, 15 April 2020
- UK Government: Job Retention Scheme, 15 April 2020
- Scottish Government: New Mental Health Support, 14 April 2020
- UK Government Response: Commission on Human Medicines: Advice on Ibuprofen and Coronavirus, 14 April 2020
- Scottish Government: National Helpline to Support Those at High COVID-19 Risk, 13 April 2020
- UK Government: Scottish Secretary Welcomes Additional Money to Help Scotland Tackle Coronavirus, 13 April 2020
- Scottish Government: Transport Community to Help COVID-19 Sufferers, 12 April 2020
- Scottish Government: New Measures to Protect Business Tenants, 10 April 2020.
- Scottish Chamber of Commerce: COVID-19 Update
- Scottish Government: Skills matching service to help rural business. 09.04.20
- Scottish Government: Additional COVID-19 Daily Data Published 08.04.20
- UK Government: Coronavirus (COVID-19): letter to the manufacturing sector 08.04.20
- UK Government: Letter from the Secretary of State for Business, Energy and Industrial Strategy, Alok Sharma, to those working in retail. 08.04.20
- Scottish Business Community calls for clarity, consistency and cooperation in COVID-19 response 3 April 2020
- Help find new ways too ease global disruption: apply for funding. 3 April 2020
- UK Export Finance to offer export insurance in all major markets in response to Coronavirus (COVID-19). 3 April 2020
- Chancellor strengthens support on offer for business as first government-backed loans reach firms in need
- Scottish Business Community calls for clarity, consistency and cooperation in COVID-19 response. 3 April 2020
- Scottish Govenment Help with non-domestic rates in Scotland during coronavirus (COVID-19) Last updated: 2 April 2020
- Coronavirus: Rishi Sunak announcement on UK government aid for self-employed
- UK Government Self-employment and Universal Credit
- Scottish Government Coronavirus (COVID-19): business and social distancing guidance. Published 25.03.20
- Scottish Government Coronavirus (COVID-19): guidance for businesses on offering support. Published 24 March 2020
- 20th March Update
- SCC & Scottish Government Update 18th March
- SCC & Scottish Government Update 17th March
- PKC Coronavirus (Covid-19) Guidance
- UK Government Coronavirus (Covid-19) Link
- Scottish Government Corona Virus (Covid-19) Link
- NEW Find Business Support in response to Coronavirus - from Scottish Enterprise Source
- Coronavirus: £320m rescue package for business from Scottish government - BBC Sourced
- Guidance & Quick Links
- Helpline announed by Fiona Hyslop, Economy Secretary - Sunday 15th March 2020