A tribunal decision has found that Deloitte, the Administrators appointed to deal with redundancies at Comet did not adequately consult with Employees. It has awarded up to 90 days pay per Employee as a protective award, which is likely to result in a government bill of at least £6 million.
How do Employers consult effectively with Employees?
It is good practice to consult with Staff as soon as a contract is lost, a proposal is made for a site closure or profits fall significantly enough to warrant redundancies. However, it is also important that Employees remain motivated. There is a fine balance between informing Staff at the appropriate time and worrying them unnecessarily if the future is looking hopeful.
The law states that before any redundancy notices are issued meaningful consultation must take place. Depending on the numbers of employees at risk of redundancy this could be up to 45 days over a period of 90 days or less.
What is meaningful consultation?
Employers have a duty to consult with appropriate representative of any Employees who may be affected by any proposed redundancies. This is usually done via a trade union if one is recognised but Employers have to take care that they also consult with those who are not in a trade union. Depending on the scale of the redundancy exercise this can be via a collective consultation process (consulting with employee representatives of the workforce) or by individual consultation.
Consultation must be undertaken by the Employer with a view to reaching agreement with appropriate representatives on issues such as ways of avoiding dismissals or reducing the number of Employees to be dismissed. This duty applies even when the Employees to be made redundant are volunteers. Failure to comply with the consultation requirements could lead to a claim for compensation, known as a protective award.
Measures for minimising or avoiding compulsory redundancies may include:
• Natural wastage such as early retirement, or voluntary notices
• Restrictions on recruitment
• Reduction of overtime
• Seeking applicants for voluntary redundancy.
• Salary and benefits freezes
What information must an Employer disclose about proposed redundancies?
To ensure Employee Representatives can play a useful part in the consultation, an Employer must disclose certain information in writing including:
• Reasons for the proposed redundancies
• Numbers and descriptions of employees affected
• Proposed method of selecting the employees who may be dismissed
• Proposed method of carrying out the dismissals, taking account of any agreed procedure, including the period over which the dismissals are to take effect
• How redundancy payments, other than the legal minimum, will be calculated.
It is also essential that a HR1 Form is sent informing the Redundancy Payments Service (RPS) of any potential redundancies prior to any consultation taking place. Failure to do so may result in a fine of up to £5,000.
A redundancy process guide and a redundancy policy are available from HR Companion.
For any advice and guidance on redundancy as a whole please contact firstname.lastname@example.org.