We are currently running a series of programmes based around frequently asked questions and the current topic is redundancy. As you’ll be aware these are difficult times for many businesses with many looking at ways to cut costs through restructuring, and/or reorganisation. If that results in redundancies, and you’re making 20 or more employees redundant within any 90-day period at a single establishment, then the collective redundancy consultation rules are triggered – very important, with significant penalties for a failure to comply with them.
There's no time limit for how long the period of consultation should be, but there are minimum requirements. So, if an employer is proposing to dismiss 100 or more employees, the process must start at least 45 days before the first of those dismissals can take effect. If the numbers are 20-99, it’s 30 days.
The test for when to start is in the legislation – it’s the point in time when the employer is ‘proposing to dismiss’. But what does that mean in practice? That is a very important question, one we are frequently asked. On the line from Aberdeen to help with that, Claire Scott:
Claire Scott: “Well, the first thing I would see is that proposal to dismiss is actually at quite an early point so the requirement to collectively consult and put in an HR1 forum comes at quite an early point in the process. So, it's not when a decision to dismiss has been made, it’s a proposal to dismiss. That is a vexed area of the law, it’s an area which I continually get calls from clients asking about, you know, have we reached the proposal to dismiss territory? Do I need to submit an HR1 form? Do I need to start the collective redundancy process, or not? So it's really something that needs to be carefully considered and with the board, they'll often be at management or board level, there'll be discussions around business change and what's going to happen and whether you're getting funding for something or not, etcetera, and so there are lots of business discussions happening around this time and there can often be a lot of different options at this point. Where there are a lot of different options and, really, there's no formed proposal yet, the requirement to collectively consult isn't usually there. But that can tip very quickly in the context of a meeting with the board and that's why, I always say, bring in HR early because they can give guidance to those who are making those decisions, or are having those discussions, to ensure that they are planning in advance. So yes, you can plan in advance of that proposal to dismiss and, actually, if you're dealing with a lot of people, I would recommend it. So you want to ensure that HR are brought in early so that they can do that planning before that proposal to dismiss is formed and that is so that a collective redundancy process can be commenced, so reps can be elected, and discussions can be started, and consultation can be started. As part of that HR also have to think about when it's appropriate to lodge the HR1 form. So these are all really important questions and it’s quite a high risk area of the law so I think in terms of planning, the earlier the better.”
We have added this programme to our FAQs series of programmes. To find them just type ‘FAQ/redundancy’ in the search engine of the Out-Law website.