Part 1: Planning your consultation process
Many businesses will be in the unenviable position of having to consider making redundancies as Government support under the furlough scheme begins to taper off from July, with the scheme ending entirely on 30 September 2021.
In the first in a short series, we look at what you need to think about when planning a redundancy consultation process.
Planning a redundancy process entails looking at logistics, finances and legal requirements - it's a significant task. And for businesses which may need to make redundancies over the summer, it's beset by uncertainty, as it's unclear whether the 'work from home' guidance will be retracted and whether the Government's plan for easing lockdown will be delayed. So the redundancy process may need to be handled remotely, or could possibly take place in person.
First steps
One of the most crucial things to consider is whether you will need to carry out collective consultation with elected employee representatives (or a trade union), as this has a major impact on timings.
Collective redundancy consultation
If you are proposing to dismiss 20 employees or more at one establishment within a period of 90 days or less, you will need to consult collectively over the proposals.
This entails:
- providing written information to and consulting with representatives with the affected employees; and
- notifying the Department for Business, Energy & Industrial Strategy of the proposals by submitting form HR1.
Crucially, the redundancy dismissals cannot take place until at least 30 days after you start collective consultation (or 45 days, if you are making 100 or more staff redundant). There is also lead-in time if you don't already have employee or trade union reps in place, so you need to factor in time for an election.
You will need to consider at what stage you will need to begin consultation - i.e. when your proposal is sufficiently firm for the legal obligation to kick in. This is fact-sensitive and you will need to think strategically - beginning too early, when proposals are unclear, could simply serve to frustrate staff, while beginning too late, when the plans are a fait accompli, may expose you to the risk of claims.
We've got a more detailed guide to the law here. Failing to comply can expose the business to claims for protective awards (of up to 90 days' pay) and potentially prosecution of directors for failing to submit form HR1.
Where collective consultation requirements apply, it's important to remember that this doesn't remove the need to consult individually with staff at risk of redundancy, or risk claims for unfair dismissal. Although the two processes can be run in parallel to an extent, they are separate.
Business rationale
Whether you are required to consult collectively or not, during the consultation you will need to explain the business reasons behind the proposed redundancies. You will need to explain factors such as:
- the financial and operational reasons for the redundancy proposals
- the timing (e.g. why you can't wait until the furlough scheme ends)
- why particular roles are at risk of redundancy
- what alternatives to redundancy you have considered and rejected (and why)
Although these might seem obvious to the management team, they may not be obvious to staff. Thinking through the issues in detail, anticipating what queries/points staff will raise and planning how you will respond is likely to smooth the process.
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