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PRACTICAL TIPS FOR EFFECTIVE CONSULTATION DURING LARGE SCALE REDUNDANCY

27 April 2021

1. The importance of detailed planning

Detailed planning is the key to any successful redundancy consultation exercise. One of the first documents that the employer will need to have ready is the written communication to the employee representatives, detailing the information required under section 188(4). However, there are many issues to be considered before this information can be provided in full. In particular, the employer must formulate proposals for the range of affected employees; the identity of the representatives; selection pools; selection criteria and redundancy terms. Important decisions may also need to be taken about the constituencies from which representatives are to be elected. It will also be prudent to determine an outline timetable for consultation and the process of implementing the redundancies.

2. Establishing the business case for redundancies

One of the earliest topics on which consultation must take place concerns ways and means of avoiding the redundancies. The information provided to the employee representatives must include the reasons for the proposed redundancies. The employer must therefore develop the business case for the redundancies and any supporting documentation to be provided during consultation. Where the redundancies arise out of the need to change terms and conditions, the business case for the change will need to be set out. The aim is to provide a cogent explanation, supported by relevant information, to allow the representatives an opportunity to understand what is being proposed and why, and to prepare their response.

In addition, the employer should expect consultation to include some consideration of alternatives to redundancy or arrangements which would reduce the numbers of dismissals. These may include proposals for redeployment, voluntary redundancies, short-time working or job sharing. The employer will need to explain to representatives the steps short of redundancies that have already been considered or explored and respond meaningfully to any counter-proposals made by the representatives.

3. Establish proposed numbers and timescale

The employer needs to establish proposals for the number of, and timescale for, any redundancies. This will indicate whether consultation is required at all and what the minimum consultation period will be. Care needs to be taken to ensure that all relevant proposed "redundancy dismissals" are identified. In addition, where redundancies are occurring at more than one location, consideration may need to be given to whether the redundancies are occurring at a single establishment.

The employer needs to establish when the redundancies are likely to take place. In some cases, there may be a need to retain employees for a particular period to complete specific tasks or to deal with a phased cessation or handover of certain activities. In these cases, some form of retention bonus may be considered.

4. Identifying appropriate selection pools

The next stage is to identify the employees affected by the proposals. The information to be provided to employee representatives should break down the proposed dismissals by categories of employee and identify the total number of employees in each category employed at the establishment. At this stage the employer will also need to identify appropriate redundancy pools and establish whether selection for redundancy is required. Where all of the employees in the selection pool are to be dismissed, no selection criteria will be required. However, selection criteria will be required where the proposal is to reduce the numbers of employees in the pool.

Identifying the appropriate redundancy pools is an important element in ensuring that any subsequent dismissals are fair. The fairness of the dismissals can be entirely undermined if the pool is defined too narrowly. The pool should not necessarily be confined to the most obviously affected group of employees. If there are other employees who carry out the same or similar types of work, or who have interchangeable skills, consideration needs to be given to including those employees in the redundancy pool.

The size of the pool defines the employees who will be affected by the redundancy proposal and whose representatives will need to be consulted. It will also affect the constituencies from whom representatives are to be elected. An employer will not wish to rush into consultation only to find that the selection pool has been too narrowly defined, so that extending it will require consultation to begin again in respect of a wider group of employees.

A further practical point is that the selection pool must be such as will allow the ready application of selection criteria. The wider the categories of employees in the pool, and the greater the differences in the work they do or the skills they have, the harder it will be to apply meaningful selection criteria consistently to the employees within the pool.

5. Identifying proposed selection criteria

The statutory information given to employee representatives must also set out the proposals for selecting the employees to be made redundant. This means that the employer needs to formulate selection criteria and table these for consultation. This can be an onerous task: the selection criteria must be carefully drawn up to ensure that the best employees in terms of skills and expertise are retained to meet the future needs of the business. Furthermore, the criteria must be as objective as possible and capable of being applied fairly and consistently, in order to minimise the risk of successful discrimination and unfair dismissal claims.

If the employer does not have sufficient time to formulate well thought-out selection criteria before consultation begins, the employer may choose to delay the provision of this information until after consultation on issues such as means of avoiding the redundancies or reducing their number is under way.

6. Establishing redundancy terms

The information provided must set out proposals for any redundancy payments over the statutory basic entitlement. Employers may have existing redundancy severance terms or may have terms which apply by custom and practice. If not, specific proposals may need to be formulated. This may include establishing voluntary as well as compulsory terms. Voluntary terms will usually need to be more favourable than compulsory terms to provide an incentive to volunteer. It is important to communicate the proposed terms in a manner which prevents those terms acquiring contractual force through custom and practice. For example, it is useful to state that the terms have been adopted by senior management or the board for the purposes of the specific redundancy exercise and that there is no obligation to apply the term in any future redundancy exercise. The employer should also be careful to reserve the right to select volunteers according to business needs.

In addition to establishing the financial packages to be provided, employers will need to consider and take advice on the procedure to follow. For example, will employees be required to sign settlement agreements in return for enhanced redundancy payments? Will employees be required to work their notice periods or stay until any defined point in time, and how will the payments be treated for the purposes of tax?

7. Identifying outplacement and other support

The employer could consider whether any outplacement or other assistance will be provided, although this is not a requirement of the legislation. This may include holding job fairs, giving assistance with interview skills and CV preparation, to help employees obtain alternative employment. A process to facilitate internal redeployment and any retraining should also be developed.

 8. Preparing appropriate communications

In addition to the statutory information letter to be provided to representatives, the employer will need to prepare an overall communication process. The employer will not wish employee representatives to be the only source of information to the affected employees.

Key communications will include a letter to be sent directly to all affected employees, advising them of the proposals and the arrangements for consultation. These can be regularly repeated. It is also common for employers in large-scale redundancies to prepare employee briefings and communications, web casts and Intranet updates, and "Q and A" briefings during the consultation process to keep employees informed of developments.

Employers should also take care to identify employees on long-term sick leave, maternitypaternityshared parentaladoption or parental leave, secondment and holiday, ensuring that they are included in the communication process.

Where it is necessary to invite the employees to elect representatives, the arrangements for that election, the numbers of representatives to be elected, information about who can stand for election and the process of election must be explained. Documents for use in the election process will also need to be prepared. Once representatives are in place, the employer will need to send the requisite statutory information.

In addition to employee communications, the employer may need to develop appropriate communications to customers and suppliers, as well as Stock Exchange announcements (where relevant), letters to local MPs and press releases.

9. Developing a timetable for consultation

It is important to begin consultation with a realistic timetable, which balances commercial pressures, and notifications to regulatory authorities against the need for genuine and full consultation, and allows sufficient time to actually implement the redundancies through selection and individual consultation. Management need to understand the legal constraints that govern how quickly redundancies can be effected.

10. Allocating responsibilities

Once the timetable is developed, the employer should allocate responsibilities for collective consultation and support, and redundancy implementation (applying the selection criteria, reviews, establishing the list of potentially redundant employees, individual consultation with employees, the hearing of appeals and HR support).

Key meetings should be time-tabled and diarised. In larger-scale exercises, particularly where more than one site is involved, there should also be some central control of the process (and of communications in particular) to ensure consistency and timely progress. HR should be asked to identify alternative employment opportunities and collate information about these (including terms and conditions).

11. Progressing consultation

It is recommended that a timetable and outline agenda for the consultation process is discussed and agreed at the first consultation meeting. It may be appropriate to structure consultation as follows, to ensure that the process is focused and carried out expeditiously:

  • The first consultation meeting should be used to communicate the proposals, seek agreement on the timetable for consultation, arrange the necessary meetings and try to seek agreement on the use of voluntary redundancies. Redeployment may also be usefully considered at this stage.
  • The purpose of the next consultation meetings would be for the union to respond to the proposals and for detailed consultation to take place on whether the redundancies can be avoided or reduced, alternatives to redundancy, and the appropriateness of the proposed selection pools.
  • Thereafter, consultation should be about the process of implementation, including the selection criteria, how they will be applied, how the individuals will be consulted, and timescale. Alternative employment and other forms of support for those dismissed may also be discussed at this stage.

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