In February, furlough was an alien concept, but now – six months later – it is a full, or part-time, state for almost 10 million people in the UK. The furlough scheme, or, to use its proper name, the Coronavirus Job Retention Scheme (CJRS), has been a lifeline for many, and a level of state support unrivalled since the Second World War. However, furlough is fast approaching its final curtain, as the CJRS is due to end on 31 October 2020, with the gradual step back of the level of Government support offered to employers increasing this month.
With this in mind, what comes next for both employees and businesses? Unfortunately what may lie ahead is a winter of discontent in the UK, because the next step for many struggling companies will most likely be redundancies. It is estimated that one in three firms will make redundancies over the coming months, with the number of large scale redundancies increasing five fold over the same period last year.
With almost nine weeks left in the CJRS why should employers be thinking of this now? Well, a very good reason businesses should have redundancy on their radar is because, depending on the level of redundancies required, collective consultation obligations may apply and failing to comply with these obligations is a costly mistake to make.
When does an obligation to collectively consult arise?
When a business is considering making redundancies, it must identify the number of employees who may potentially be made redundant. The more employees an employer is proposing to dismiss, the more obligations arise to ensure there is a fair redundancy process.
An employer who is proposing to dismiss 20 or more employees within a 90-day period or less at one establishment must adhere to statutory collective consultation procedures. The consultation must be with employee representatives, which may involve holding elections if there are no recognised trade unions in the workplace, and this must be done at an early stage when the business is only “proposing” to dismiss, and has not made any decisions. Businesses must also notify the Department for Business, Energy and Industrial Strategy (BEIS) before giving notice to terminate any employees’ contracts, within the timescales below.
According to the legislation set out in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), consultation must be done “in good time” before any dismissal and at least:
- 45 days before the first of the dismissals is due to take effect where the employer is proposing to dismiss 100 or more employees; and
- 30 days before the first dismissal takes effect where the employer proposes to dismiss at least 20 but less than 100 employees.
With the furlough scheme set to end on 30 June, this does not give employers much time to begin large-scale collective consultation exercises if they want that process to end during or at the end of the scheme. For larger redundancies, if the employer wants the collective consultation period to end at the same time as the furlough leave scheme is currently due to end (i.e. 30 June), the 45-day timescale will start to run on 16 May and, as this is a Saturday, consultation should begin no later than 15 May, which is just over a week away.
Consequences for failing to get it right
There are many reasons why businesses should care about getting the collective consultation process right.
Firstly, an employee or trade union representative can raise a complaint to the Employment Tribunal if the employer fails in their collective consultation obligations. If a Tribunal agrees this is the case, they have the power to make a protective award against the employer. The maximum protective award is 90 days' actual pay per employee affected. Depending on how many employees are being made redundant, this could be a significant cost to an already struggling business.
In addition, individual employees can raise claims for unfair dismissal if they believe the redundancy process was unfair, subject to having qualifying service. In short, this is an expensive mistake for any business to make.
How to get it right
Employers can avoid a hefty bill for failing in their collective consultation obligations by getting the process right in the first place, which means planning now. This process will include following redundancy policies, and complying with the timescales and requirements of the TULRCA legislation.
Even with the uncertainty over furlough, employers who are considering redundancies should not wait before beginning collective consultation. Any delay can only be to the detriment of the business and would be a costly one.
Also available as a webinar & podcast
Listen to our latest content on redundancies and collective consultation here. This can also be downloaded as a podcast from iTunes, Spotify and Google Podcasts.
For more information on the latest guidance on the Coronavirus Job Retention Scheme, catch up with our employment law webinars here.
MacRoberts can also help with fixed fee packages for redundancy advice and documentation. If you are interested in this please contact a member of our specialist Employment Law team.