There are two ways to conduct a redundancy consultation. It will either be a collective consultation or an individual meeting.
But, failing to conduct the correct consultation process can be risky. As a rule, making any redundancies without it will be unfair. In most cases you will end up at an employment tribunal.
The number of people planned for redundancy will determine which process to use.
UK employment laws do not set out any specific rules where there is less than 20 redundancies.
Even so, it is solid practice to consult with all employees and their representatives. A tribunal might rule an unfair dismissal if your actions are different.
There are times when management must follow the rules for ‘collective consultation‘. It is law when making 20 or more employees redundant within any 90-day period at the same organisation.
Note: The law does not require redundancy consultation to end in a mutual agreement. But, you must carry it out with the view of reaching one. That will include using methods that avoid or reduce the number of redundancies.
Collective Consultation Process
Collective consultation means you will be consulting the entire group of people ‘collectively’. In this case employers should follow these 6 steps.
- Notify the official Redundancy Payments Service (RPS) before any consultation begins. The deadline will depend on the final number of proposed redundancies.
- Consult with any relevant trade union representatives or the elected employee representatives. You can meet with the staff directly if there are no representatives.
- Provide all the information to the representatives or staff. This must include all details of the planned redundancies. Representatives or staff will then need some time to consider the company intentions.
- Respond to any specific requests for further details or information.
- Provide a termination notice to any affected staff showing the agreed leaving date.
- Issue redundancy notices after the redundancy consultation gets completed.
Collective Redundancy Consultation Period
The law does not state a time limit on how long a redundancy consultation should last. But, you must follow the minimum period before dismissing any employees.
- 20 to 99 Proposed Redundancies: 30 days minimum consultation period before dismissal.
- 100 or more Proposed Redundancies: 45 days minimum consultation period before dismissal.
You must provide written details and specific information to representatives or staff including:
- The company reasons behind the need for making staff redundant.
- The final tally of redundancies and the categories of employees involved. It should also include the number of workers in each category.
- How the organisation plans to select employees for redundancy.
- How the company will carry out the redundancies and calculate redundancy payments.
Note: Further guidance is available on handling large-scale redundancies from the Advisory, Conciliation and Arbitration Service.
Advance Notification of Redundancies
Notify Redundancy Payments Service using form HR1. You will find full instructions on where to send it on the document. The deadline for notifying RPS will depend on the number of proposed redundancies.
RPS Group Redundancies
- 20 to 99 Proposed Redundancies: Notify RPS 30 days before the first redundancy.
- 100 or more Proposed Redundancies: Notify RPS 45 days before the first redundancy.
Note: Failing to notify Redundancy Payments Service can result in a fine up to £5,000.
Giving Redundancy Notice to Employees
Employers must give proper redundancy notice to their employees. After the consultations have finished, all parties must then agree a leaving date.
Give your staff no less than the statutory notice period. As a rule, that gets based on their length of continuous employment.
- 1 Month to 2 Year Service: Give at least one (1) week notice.
- 2 Years to 12 Year Service: Give one (1) week notice for every year employed.
- 12 Year Service (or longer): Give twelve (12) week notice.
Note: You can choose to let staff go earlier than the scheduled leaving date. That means they can leave without service notice by offering them a payment in lieu (instead of).
Employee Notice Pay
You must provide your employees with notice pay. You should base it on their regular pay rate and their notice period. In some cases you can also make a payment in lieu of notice.
Payment in Lieu of Notice
As a rule you can end your employee’s employment without any notice. But, they must have a payment in lieu of notice clause in their employment contract. That means your payment covers the notice period that they would have worked.
Remember that any payments in lieu must have tax and National Insurance deducted.
Note: Making payments in lieu of notice means paying them the basic pay they would have received during their notice period. You may also need to pay private health care insurance, workplace pension, or other contributions if it says so in their contract.