In today’s uncertain economic environment, it is rare to see a week go by without a major employer announcing redundancies, be that as a result a restructuring, a contracting business or a merger or acquisition. This is inevitably a worrying time for both employees who fear they may be at risk and employers, who must ensure a correct process is followed.
What is collective redundancy?
A collective redundancy is when, within a 90-day period, an employer proposes to dismiss 20 or more employees as redundant at one establishment. Generally, ‘establishment’ is taken to mean one site or workplace.
What is the current law?
Where an employer is proposing to make 20 or more redundancies at one establishment, within this 90-day period, the employer must:
- consult with the appropriate trade unions or (if there isn’t one) employee representatives; and
- notify the Secretary of State.
Consultation should start in good time and at least 30 days before the dismissal is proposed.
The employer must notify the Secretary of State at least:
- 30 days before the first dismissal, if there are anywhere between 20 to 99 redundancies; or
- 45 days before the first dismissal, if there are 100 or more redundances.
Failure to comply with the above could result in ‘protective awards’ against the employers of up to 90 days’ pay per employee. Moreover, failure to notify the Secretary of State is a criminal offence and can result in an unlimited fine.
Redundancy is a potentially fair reason for dismissal and therefore may give an employer a defence to an unfair dismissal claim.
What does the Bill say?
The Bill is set to provide a huge shake-up to the scope of employment law but, in terms of collective redundancies, important changes will be coming.
Winter 2025 and early 2026
The government may be consulting on whether the minimum consultation period of 45 days for 100 or more redundancies will be doubled to a minimum of 90 days.
April 2026
Protective awards for failing to comply with obligations will be increased from the currently used 90 days’ pay per employee to double that at 180 days’ pay per affected employee. In addition, if the employer has failed to reasonably comply with the Code of Practice on dismissal and re-engagement (i.e. employers failing to consult), employment tribunals can award a 25% uplift on the 180 days’ pay.
2027
Currently, the trigger for collective redundancies is when an employer proposes to dismiss 20 or more employees as redundant at one establishment. Additionally, from 2027, another trigger – which has yet to be defined in regulations – will be introduced. This will mean that in practice, employers must count all of the proposed redundancies across the whole of their business (i.e. all sites and workplaces), instead of just at the ‘one establishment’. If the threshold, which is yet to be defined by regulations, is reached, that employer will be bound by the obligations necessary for collective redundancies. As explained, the threshold is yet to be determined and will be set out in Regulations – but it could be a specified figure, or a percentage test could be introduced.
What should employers do?
Employers should be ready for when the above changes do come in, especially those employers who are set up in more than one location. Robust systems and processes will need to be in place. Multi-site employers will need to have oversight of and include all redundancy proposals across all of their establishments to ensure compliance with new Regulations.
Additionally, all the necessary staff should be aware of the incoming changes, with adequate training to understand their employer systems and processes. Repercussions will be higher, thus employers must ensure their senior staff in particular are equipped to engage with unions and / or employee representatives.
The new changes do however provide an opportunity for employers to enhance their internal employee voice and ensure that employee representatives are in place, should they be required for any collective consultations. For those employers with recognised unions, it is important to maintain healthy relationships with these unions. Building trust, confidence and communication will only help to serve employers and employees alike when navigating these more complex changes.
Legal Advice
If an employee believes that any of the required steps have not been followed or have any other concerns about the implementation of the redundancies, they should seek legal advice. It is a situation where mistakes can be made by employers keen to reduce their headcount in a hurry, leading to potential claims for unfair dismissal and, where there’s an improper motive behind the redundancy process, further claims like those for discrimination.
Legal Advice
If an employee believes that any of the required steps have not been followed or have any other concerns about the implementation of the redundancies, they should seek legal advice. It is a situation where mistakes can be made by employers keen to reduce their headcount in a hurry, leading to potential claims for unfair dismissal and, where there’s an improper motive behind the redundancy process, further claims like those for discrimination.
