Redundancy because of COVID-19 - top 10 tips for senior executives negotiating an exit
Our top 10 tips for employers are as follows:
Identify how many employees you are proposing to make redundant in order to determine whether the proposal will trigger collective consultation (including those employees who may be redeployed resulting in new terms and conditions of employment being issued and those who have elected to take voluntary redundancy).
It is necessary to comply with collective consultation obligations when an employer proposes to make 20 or more employees redundant ‘at one establishment’. There are occasions where the definition of ‘one establishment’ is not straightforward (such as when a company has different sites and some employees work across the different sites). Under these circumstances employers should consider whether the workplace from which the redundancies will take effect:
Depending on the responses to these questions, the definition of establishment can extend to more than one place. Note that, in order to be an “establishment”, there is no need for the workplace to have legal, economic, financial, administrative or technological autonomy, or a management which can independently effect collective redundancies.
Prepare a timeline, setting out the necessary steps in the process, including what needs to take place, by who and when, taking into account the relevant minimum consultation period. Be prepared to apply some flexibility to this timetable, in case of unexpected issues arising during the process.
Where you are proposing to make redundant, within a 90 day period:
Is there a recognised trade union? If so, the collective consultation should take place with trade union representatives. If not, the duty is to inform and consult with appropriate representatives of the affected employees and the rules governing the election of employee representatives will need to be complied with.
Ensure the consultation process is meaningful by providing relevant information and be careful not to present the redundancies as a fait accompli. Firstly, explain the business proposal and consult on whether and how redundancies can be avoided or reduced. Certain information should also be provided in writing to the appropriate representatives, in accordance with statutory duties. This includes:
Be clear about entitlements to redundancy pay. Provide information to affected employees about opportunities for suitable alternative employment. Consider and respond to any counter-proposals from the employee representatives.
This could include a consultation pack for affected employees, template announcements, letters, scripts for consultation meetings and redundancy calculations. Carefully plan the points to be discussed ahead of each consultation meeting, ensure consistency of content between consultation meetings and take accurate contemporaneous notes of meetings.
Complete and submit to the Redundancy Payments Service the ‘HR1 – Advance Notification of Redundancies form’, at least 30 or 45 days in advance of the first dismissal taking effect, depending on the number of proposed redundancies. Failure to do so is a criminal offence.
Give as much warning as possible of impending redundancies, to enable meaningful consultation to take place. This will also give the affected employees more time to constructively plan their future career options and enable the employer to introduce changes in a rational way.
Employers should not assume that collective consultation is an adequate substitute for individual consultation (see our blog on individual consultation). Depending on the circumstances, it might be appropriate to either carry out individual consultation once the collective consultation process has ended, or to run collective and individual consultation concurrently.
Consider going beyond your contractual and statutory obligations, by offering affected employees ‘sweeteners’, such as re-training, outplacement support, an agreed reference and/or an ex gratia payment in exchange for them agreeing to enter into a settlement agreement under which they would agree to waive the right to bring claims against the employer in relation to their employment and its termination.
ACAS has produced non-statutory guidance aimed at employers on managing redundancies, which can be found on its website. As well as explaining an employer's legal obligations and how to run an effective collective redundancy consultation, the guidance also includes a sample redundancy selection criteria matrix and a redundancy procedure for agreement between employers and employee representatives.
There are other scenarios where collective consultation obligations may arise. For example, in circumstances where an employer seeks to change terms and conditions of employment by dismissing and re-engaging staff on the new terms. However, this blog focuses exclusively on collective consultation obligations in the context of redundancies only.
In summary, there are many important technicalities for employers to consider when preparing and implementing a collective consultation redundancy process. We have a wealth of experience in redundancy programmes, particularly in professional and financial services, and can advise and support you in order to minimise risk and protect your business.
Moira is an experienced employment solicitor. She has successfully represented both employers and employees at the employment tribunal. She regularly advises clients pursuing and defending claims for unfair dismissal, discrimination and whistleblowing.
Moira’s clients include senior executives, partners and employers, working within a broad range of industries. She regularly acts for clients within the financial and professional services, tech, media, design, publishing, manufacturing and fashion industries.
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