FAQs on collective consultation

As the furlough scheme begins to wind down, many businesses will be contemplating large-scale redundancies. Sarah Austin offers answers to some key queries around this issue

FAQs on collective consultation

When must an employer collectively consult?

When the employer is proposing to dismiss as redundant 20 or more employees at one establishment, within 90 days or less. 

How long must collective consultation last?

The minimum period, from the date consultation starts to the date the first dismissal takes effect, depends on the number of employees the employer is proposing to make redundant. For 100 or more employees to be made redundant, this period is 45 days and, for 20-99 employees to be made redundant, 30 days. However, consultation must take place in ‘good time’ before the redundancies take effect. 

Who should employers consult with?

Appropriate representatives of the affected employees. If no trade union is recognised by the employer, it can consult with elected employee representatives, or any pre-existing standing body of employee representatives, provided it has authority from the affected workers to be consulted regarding the proposed redundancies.

What do they need to consult on?

As a minimum, employers are obliged to consult on ways of avoiding the dismissals, reducing the number of redundancies and mitigating the consequences of the dismissals. To avoid claims of unfair dismissal, businesses should also consult on the information that should be included in a section 188 letter.

How does the furlough scheme affect the process?

Nothing specifically stops employers from collectively consulting during furlough, and employee representatives can take on duties for collective redundancies during the furlough period. 

Employees can be made redundant while they are on furlough but, to avoid a dismissal being unfair, companies should be able to demonstrate that furlough has been considered as an alternative to redundancy for each relevant role, and why it is not a suitable alternative.

Employers cannot use money received under the furlough scheme to make statutory or enhanced redundancy payments, or to pay employees in lieu of notice, once employment has ended. 

Do proposed redundancies have to be notified to the government?

Employers must notify the secretary of state for business, innovation and skills where they are proposing to dismiss as redundant 20 or more employees at one establishment within a 90-day period (by using a HR1 form) or risk a fine of up to £5,000.

Do employers have to reach an agreement with the representatives?

Not necessarily but, if they can’t reach an agreement, they must show they have exhausted all possibility of reaching one – or risk breaching their duty to inform and consult.

Do businesses that collectively consult also need to consult employees individually?

Yes. However, the individual consultation process is likely to be streamlined, as many of the issues that would otherwise be individually consulted on will have been dealt with through collective consultation.

How can employers ensure good communication with all employees, including furloughed staff?

It is likely that consultation meetings will take place virtually and that communication outside of those meetings will be by email. Employers should make sure that representatives and all affected employees have access to the relevant technology. Putting in place Q&A documents that are accessible to employees and updated throughout the consultation process can help to ease the pressure on representatives. Employers may also want to consider translating communications for staff whose first language isn’t English.

What are the consequences of failing to consult collectively?

If businesses fail to collectively consult where the duty applies, any resulting dismissals will almost certainly be considered unfair by the employment tribunal, meaning employees will be entitled to financial compensation. An employment tribunal is also entitled to award a protective award, which can be up to 90 days’ gross pay for each employee.

Sarah Austin is an employment lawyer at Capital Law