Redundancies are all too common in the workplace, with around 30 % of all employers in the UK expected to make redundancies this year. Losing your job is rarely a pleasant experience, but when it affects a large group of employees at once, it can be even worse. These collective redundancies are legally complicated and often emotionally charged, which is why it is important to understand your rights and the obligations of your employer during a collective redundancy.
In this article, we will explain what a collective redundancy is, the procedures employers must follow, the consultation process, and how our team at Elite Law Solicitors can help you work through this scenario with your best interests in mind.
If you require specialist legal advice or assistance regarding collective redundancies, get in touch with our experienced Employment Law Solicitors by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or by completing our Free Online Enquiry Form.
What is a collective redundancy?
A redundancy occurs when an employer reduces its workforce because certain roles are no longer required. This may be due to a fall in demand for products or services, the closure of a business, relocation, restructuring, or the introduction of new technology that makes some jobs redundant.
A collective redundancy is a specific type of redundancy that arises when an employer proposes to dismiss 20 or more employees at a single establishment within 90 days or less. Reaching this threshold triggers additional legal obligations for the employer, including the requirement to carry out a formal collective consultation process.
Why the number matters
The law focuses on the number of dismissals proposed, not the number that ultimately occur. For example, if an employer plans to make 25 people redundant but later redeploys five into other roles, the duty to follow collective redundancy rules still applies because the original proposal involved 20 or more dismissals.
What does ‘establishment’ mean during a collective redundancy?
The term “establishment” typically refers to a single workplace or site, but the definition can be complex. In some organisations, each branch or store may be considered its own establishment. In others, multiple locations might be treated as one if they operate as a single unit. The way an establishment is defined can have a major impact on whether collective redundancy rules apply.
Common examples of collective redundancy
Collective redundancies can occur in a wide variety of industries and settings. For instance:
- A manufacturing company shuts down an entire production line, affecting dozens of workers.
- A retail chain announces the closure of several stores in the same region.
- A local authority restructures services and reduces staffing levels due to budget cuts.
In each of these cases, the employer must ensure that the process is conducted lawfully, with proper consultation and support for affected employees.
Why rules exist for collective redundancies
The law on collective redundancies is designed to protect employees from being treated unfairly during large-scale job losses. These rules give you, as an employee, time to understand the situation, explore alternatives, and prepare for the impact.
They also aim to encourage transparency and fairness by ensuring employers provide information early and consult with employees or their representatives before making final decisions. Failure to follow the correct process can result in legal claims and financial penalties for the employer.
The legal framework for collective redundancies
Collective redundancy rights and obligations are set out in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). This Act brings together several strands of UK labour law and incorporates principles that originated in European Union directives. Even though the UK has left the EU, these rules remain in place to protect employees during large-scale job losses.
When the duty to consult applies
Under TULRCA, an employer must engage in collective consultation when they are proposing to dismiss 20 or more employees at a single establishment within a 90-day period. This duty applies whether or not the redundancies eventually happen, as it is triggered by the proposal itself.
Consultation must be with a recognised trade union if one exists. If there is no union, employees can elect representatives specifically for the consultation process. Alongside this, the employer must also notify the Secretary of State by sending a formal HR1 notice to the Redundancy Payments Service (RPS).
Timing of consultation
Consultation must start in good time, meaning as soon as collective redundancies are seriously being considered and before any dismissal notices are issued. The law sets minimum consultation periods as follows:
- For 20 to 99 proposed redundancies: At least 30 days before the first dismissal.
- For 100 or more proposed redundancies: At least 45 days before the first dismissal.
Starting consultation too late, or after decisions are already made, can be a breach of the law. Having this knowledge is useful as it ensures that your employer is fulfilling their legal obligations during a redundancy.
Information employers must provide
There are several key obligations that employers must adhere to during a collective redundancy. For example, the employer must give employee representatives written information about:
- The reasons for the proposed redundancies
- The number and categories of employees affected
- The total number of employees at the establishment
- The selection method for deciding who will be made redundant
- The timetable for dismissals
- The proposed method for calculating redundancy payments
This information allows representatives to respond meaningfully and propose alternatives.
Consequences of non-compliance
Failing to comply with the collective redundancy rules can lead to serious legal and financial consequences. An employment tribunal can make a protective award, ordering the employer to pay each affected employee up to 90 days’ gross pay for failure to consult properly.
Separately, failing to notify the RPS by submitting Form HR1 is a criminal offence. This can result in a fine for the company and, in some cases, personal liability for its directors.
Interaction with other employment rights
Collective redundancy rules work alongside other legal protections. Employers must still ensure the redundancy selection process is fair and complies with the Equality Act 2010, which prohibits discrimination based on protected characteristics such as age, disability, gender, race, religion, or pregnancy. An employer who follows the consultation timetable but discriminates in the selection process could still face legal claims.
When the rules apply for collective redundancies
The duty to consult collectively applies when the employer proposes to dismiss 20 or more employees within 90 days at one establishment. These dismissals must be for reasons not related to the individual employees personally (for example, not due to misconduct but because the role is no longer needed).
The definition of “establishment” is important. In some cases, a single workplace site is considered an establishment; in others, different departments or locations may each be separate establishments. Disputes over this definition can affect whether the collective consultation duty is triggered.
Certain situations, such as the expiry of a fixed-term contract that was agreed in advance, are excluded from the calculation. However, employers must be careful, as getting this wrong can be costly.
The consultation process for collective redundancies
When collective redundancy rules apply, employers must consult with employee representatives before making any final decisions. If there is a recognised trade union, the employer must consult with the union. If there is no recognised union, employees can elect representatives specifically for the consultation process. These representatives are useful in negotiating on behalf of the workforce. Employers must give representatives written details of:
- The reasons for the proposed redundancies
- The number and description of employees affected
- The total number of employees at the establishment
- The proposed selection method for deciding who is made redundant
- The proposed method of carrying out the dismissals, including the timetable
- The proposed method of calculating redundancy payments
Minimum consultation periods
The law sets out minimum periods between starting consultation and issuing notices of dismissal. For redundancies that fall between 20 and 99 employees, the employer needs to start consultations at least 30 days before the first dismissal.
For redundancies of 100 employees or more, the consultation must be at least 45 days before the first dismissal. Regardless of the number of redundancies occurring, consultation must begin “in good time”. This means that it should occur as soon as the redundancies are being contemplated. Starting late can be a breach of the law.
Purpose of consultation
Consultation must be genuine. The employer should listen to the representatives’ views, consider alternatives, and explore ways to reduce job losses or mitigate their impact. This might include redeployment, changes to working hours, voluntary redundancy, or retraining.
Notification to the Government
In addition to consulting with employees, the employer must notify the Redundancy Payments Service (RPS) by submitting form HR1. This must be done at least 30 days before the first dismissal for 20 to 99 redundancies. For 100 or more redundancies, the employer has to notify RPS 45 days before the first dismissal. Failure to notify is a criminal offence and can result in a fine.
Individual consultation
Collective consultation does not replace the need for individual consultation with each affected employee. Even in large-scale redundancies, employers must meet with individuals to explain why they are at risk, discuss alternatives, and consider their feedback before making a final decision.
An employee who is dismissed without proper individual consultation may still have a claim for unfair dismissal, even if the collective process was followed correctly.
Notice periods
If you are made redundant, you are entitled to a statutory minimum notice period, based on your length of service. Your notice period will be:
- One week’s notice if you have worked between one month and two years.
- One week for each year of service between two and twelve years.
- A maximum of twelve weeks’ notice for twelve or more years of service.
Your contract may provide for longer notice periods, but it cannot be shorter than the statutory minimum. Employers can pay employees in lieu of notice if their contract allows, meaning they leave immediately but still receive pay for the notice period.
Redundancy pay
Employees with at least two years of continuous service are entitled to statutory redundancy pay. The amount depends on your age, length of service, and weekly gross pay (capped at £719). Below is a breakdown of how redundancy pay is calculated:
- Half a week’s pay for each full year under age 22
- One week’s pay for each full year aged 22 to 40
- One and a half weeks’ pay for each full year aged 41 or older
Some employers offer enhanced redundancy packages, either under the terms of the employment contract or as part of a negotiated settlement.
Alternatives to redundancy
Part of the consultation process involves exploring alternatives to compulsory redundancy. This can include voluntary redundancy, reduced working hours, job sharing, redeployment within the organisation, or retraining for different roles.
Employees should also be allowed to suggest viable alternatives. While employers are not obliged to accept all proposals, they must consider them seriously.
Your rights if collective redundancy processes are not followed
If your employer fails to follow the correct collective redundancy procedures, you may be entitled to compensation. The main remedy is a protective award, which can be up to 90 days’ gross pay per affected employee.
You may also have claims for unfair dismissal if you were selected unfairly, not consulted individually, or dismissed without proper notice.
Claims must usually be brought in an employment tribunal within three months of dismissal. It is important to seek legal advice quickly to protect your position. If you believe that you have been involved in a redundancy that did not follow correct protocol, then our team at Elite Law Solicitors are here to help you.
Special considerations for certain groups
Employees on maternity, paternity, adoption, or shared parental leave have additional protections. Employers must offer them any suitable alternative vacancies before other employees. Failing to do so may be unlawful discrimination.
Similarly, redundancy selection must not be based on protected characteristics such as age, disability, gender, race, religion, or sexual orientation. This would amount to unlawful discrimination under the Equality Act 2010.
Settlement agreements
In some collective redundancy situations, employers may offer settlement agreements to individuals. These are legally binding contracts in which the employee waives certain legal claims in exchange for compensation, often above the statutory minimum.
Settlement agreements must be signed with the benefit of independent legal advice. Many employers will contribute to the cost of this advice.
Collective redundancies: How we can help
At Elite Law Solicitors, our employment law specialists have extensive experience advising employees affected by collective redundancies. We can protect your rights during a collective redundancy to ensure that your employer is acting in your best interests in mind. Our team is here to:
- Assess whether your employer has followed the correct process
- Advise on potential claims, including protective awards and unfair dismissal
- Support you through individual consultation meetings
- Negotiate improved redundancy packages or settlement agreements
- Represent you in employment tribunal proceedings
If you are facing redundancy, early legal advice can make a significant difference to your outcome. At Elite Law Solicitors, we work closely with you to make sure that collective redundancy works in your favour. To find out more, please contact one of our employment lawyers today by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or by completing our Free Online Enquiry Form.
The content of this article is for general information only. The information in this article is not legal or professional advice. If you require legal or professional advice you should obtain independent expert advice from qualified employment solicitors such as those within our firm.
