Legal

Don’t keep staff in the dark when considering redundancies

12 Apr 2018 By Louise Singh

What are the legal risks involved in mass redundancy, and what can employers do to avoid the pitfalls? Louise Singh reports in light of a recent EAT decision

The Employment Appeal Tribunal (EAT) recently ruled on a dispute between Keeping Kids Company and its former staff, finding that the collapsed charity should have started a collective consultation over its plans to dismiss employees sooner. The judgment highlights the legal risks associated with mass redundancy, and why employers can’t afford to delay getting staff involved in the consultation process, even if all the details aren’t finalised or there’s a chance the situation might change. 

Keeping Kids Company’s workforce was made redundant in August 2015 after a government rescue package, which would have seen 50 per cent of its staff dismissed, fell through. An employer is obliged to collectively consult with employees if it is proposing to dismiss 20 or more workers over a 90-day period. The consultation process must begin 30 days before the first dismissal, or 45 days before if 100 or more redundancies are planned. Employers must also begin consultation ‘in good time’. If this doesn’t happen, an employment tribunal can order the employer to make a protective award of up to 90 days’ pay to each dismissed employee. 

In this case, the employment tribunal ruled that Keeping Kids Company should have started the collective consultation process when it first knew redundancies were likely to occur. It did not meet the minimum statutory consultation periods and employees were granted protective awards. The charity appealed, claiming it couldn’t consult with employees in good time because the scale of redundancies did not become clear until a decision on its government rescue package had been made. It also argued that negative media attention, which triggered the withdrawal of the grant money, affected its operational ability to consult with staff in a meaningful way. 

Special circumstances

Employers can sidestep the requirement to consult with employees if there are special circumstances that make it impractical to consult for the full statutory period. However, this can be very difficult to prove, and the EAT did not agree that Keeping Kids Company’s situation made it eligible for the exception. 

The EAT upheld the employment tribunal’s ruling, finding that the charity’s obligations were formally triggered when it applied for government support and showed an intention to dismiss employees. In the end, it didn’t matter that details of its redundancy programme were up in the air; the charity knew at this early stage that, ultimately, a significant proportion of its staff were going to be dismissed, and consultation should have started at this point. 

Keeping Kids Company actually found itself in a more clear-cut situation than most, since it knew from the outset that some redundancies were planned, if not the full extent. Other employers may have an even less clear idea of how things will pan out, but nevertheless they must be mindful of the obligation to trigger the consultation process as soon as it is feasible. 

Handling a redundancy exercise is always difficult and requires a sensitive approach. Deciding on the exact timeframe can be tricky, especially in complex situations, and it is understandable that employers won’t want to meet with concerned staff if they don’t have all the answers to their questions. However, this isn’t an excuse for delaying consultation. Organisations don’t have to provide details like final redundancy figures at the outset. Collective consultation is an ongoing obligation and the law allows for more information to become available over time. 

Of course, the process needs to be meaningful and undertaken with a view to reaching an agreement that avoids redundancy. If, however, dismissals turn out to be unavoidable, employees must still have been engaged throughout. Every case will be different; however, from a best practice perspective, once an organisation has decided redundancies are a realistic prospect, they should look to get the consultation moving. It’s the best way to ensure statutory minimum consultation periods are met and a meaningful dialogue with staff is undertaken. 

Louise Singh is an associate at Weightmans

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