Keeping abreast of redundancy rules

P&O Ferries has shone a spotlight on mass redundancy

Elizabeth Bremner

By Elizabeth Bremner

Elizabeth Bremner is a senior associate in the people, reward and mobility practice at Dentons

AT the end of March, P&O Ferries hit the headlines attracting substantial outrage from politicians, trade unions and the public alike when it dismissed around 800 employees without notice, subsequently replacing them with agency workers.

The employees were told via video link that their employment would end with immediate effect in order to ensure the financial survival of the company. So, how should a mass redundancy be handled, fairly and legally?

What legal duties exist regarding mass redundancies?
If an employer is planning to make 20 or more employees redundant “at one establishment” within a period of 90 days or less, they are legally required to:
• inform and consult with appropriate representatives of the affected employees for at least a minimum period;
• disclose certain information such as the reasons for the redundancy proposals to the appropriate representatives; and
• notify the UK government of the planned redundancies. The relevant notification periods are the same as for consulting representatives.

Who are the appropriate representatives?
Where an independent trade union is recognised for the purpose of collective bargaining, “appropriate representatives” means the relevant trade union representatives. The employer must also consider whether all of the affected employees are covered by the recognition arrangements. If some are not, the employer must consult with other elected representatives for those who do not fall within the bargaining unit.

What is the collective redundancy consultation process?
The collective redundancy consultation process involves informing and consulting appropriate representatives of the affected employees.

The consultation process must include meaningful consideration with a view to reaching agreement on proposals to (a) avoid the redundancies, (b) reduce the numbers at risk, or (c) mitigate the effect of the dismissals on affected employees. It is insufficient to simply explain the proposals and listen to, and not consider, counter-proposals.

There is an exceptionally narrow defence of special circumstances where it is not reasonably practicable to consult in good time or undertake the required meaningful considerations. Even where this defence applies, employers must do as much as is reasonably practicable to comply.

What is the timescale for consultation?
The timescale for consultation depends on the number of dismissals proposed. The overriding principle is that consultation must begin “in good time”. Where 20 to 99 redundancies are to be made, the consultation period must be at least 30 days before the first dismissal takes effect. Where 100 or more redundancies are to be made, the minimum period for consultation extends to 45 days.

What is the notification process?
The notification process involves informing the UK government department responsible for Business, Energy, and Industrial Strategy (BEIS) in writing using a form HR1 at the start of the consultation process. The timescale of notification is at least 30 or 45 days in advance of any redundancies, depending on the number of employees to be dismissed. The HR1 form must also be copied to the appropriate representatives who are to be consulted.

Any failure to provide notification to the Secretary of State is a criminal offence, and an employer can be liable on summary conviction to a fine.

Why should these obligations be considered?
Any employer who opts to ignore these consultation requirements risks substantial reputational damage and significant liabilities. In addition to a protective award of up to 90 days’ pay for every affected employee, a move to dismiss without fair and thorough consultation is likely to result in unfair dismissal claims which employees may be less likely to consider settling.

Employers should therefore seek to genuinely engage with employees, clearly outlining the reasons behind the potential redundancy situation and making employees aware of any alternative roles/ options. This will help to create maximum buy-in to the employer’s decision making outcomes, resulting in less cost and adverse publicity in the long run.

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