Employee guide to collective redundancy

News of the threat of widespread job losses does mean having to navigate a large scale redundancy process is a reality for many employees, and a very real prospect for many others.

Predictions for the economy are positive, but many businesses are still facing significant financial challenges and being forced to adapt or restructure to survive.

However, employers are still having to deal with significant operational challenges in the current climate. 

Rising energy costs are putting pressure on businesses, the cost of raw materials has escalated globally and higher interest rates can impact borrowing costs for businesses.

Organisations of all sizes are navigating a complex financial landscape, making trade-offs and strategic decisions to remain viable in difficult times.

Having to overcome such challenges can inevitably lead to job losses, and recently there have been reports that:

• A major challenge for the new Labour government will be the future of steel production in Port Talbot and the potential loss of 3,000 jobs as the steelworks goes green [1] cited 8.7.24

• Manchester United Football Club, listed as the fourth richest club in the world with a turnover of more than £510m is said to be planning to cut 250 jobs [2]. It is reported the move will save about £10m a year. Cited 8.7.24

• Hundreds of workers from restaurants including Brewers Fayre, Table Table and Beefeater outlets are threatening their parent company Whitbread with legal action over alleged poor consultation on 1,500 planned job cuts and closures [3] cited 8.7.24

• And a report in March warned up to eight million UK jobs are at risk from the rise of artificial intelligence (AI), with low-skilled workers predicted to be the worst affected [4] cited 8.7.24

The size of the job losses reported does mean any affected employees will be part of a collective redundancy process [5] cited 8.7.4

A collective redundancy process  is the legal requirement for employers to consult with employees and their representatives when planning 20 or more redundancies within a 90-day period at a single establishment.

Collective consultation should aim to:

• Discuss ways to avoid or reduce redundancies.
• Explore measures to minimise the impact of redundancy on affected employees.

The law governing collective consultation is the Trade Union and Labour Relations (Consolidation) Act 1992

For any employee, the threat of redundancy can be an unnerving and unsettling experience, particularly when it involves a large number of workers.

How any employee deals with the situation can depend on their understanding of the process, the legal framework and what they know about how to prepare, all of which can make a significant difference in how you cope in the circumstances.

If you are an employee facing collective redundancy this guide provides an overview of the process, what to expect, the relevant laws, and how to best prepare.

Legal framework

Consultation period [6] cited 8.7.24

There is no time limit for how long the period of consultation should be, but the minimum is:

• 20 to 99 redundancies - the consultation must start at least 30 days before any dismissals take effect.

• 100 or more redundancies - the consultation must start at least 45 days before any dismissals take effect.

P&O Ferries provided a high-profile example of the failure to properly and fairly consult with employees when it made 800 staff redundant without notice in 2022 [7] cited 8.7.24

The company did later  and publicly acknowledge it should have followed a consultation process and registered the redundancies with the government.

P&O said there was ‘absolutely no doubt’ that under UK employment law the firm was required to consult unions before making the mass cuts, but no union would have accepted the plan and it was easier to compensate workers ‘in full’ instead.

An employer’s failure to consult properly during a redundancy process can result in significant financial penalties and legal repercussions.

Employee representatives

Your employer must consult with employee representatives during a collective redundancy process.

If you are a member of a trade union, the union will represent you. This could include telling you about the redundancy proposals, sharing information, asking you for your views and suggestions and any questions you may have and  talking to other representatives and working out a collective staff response.

If there is no trade union, then employees will need to elect representatives. The representatives will be selected from existing employees picked by their colleagues to speak on behalf of the wider group of potentially redundant staff members.

The chosen representatives can play a crucial role in ensuring that your voice is heard along with that of your colleagues during the consultation process. The representatives can support you in a similar manner to a trade union representative.

Information and consultation

Your employer is legally required to provide specific information during the consultation, including:

• The reasons for the proposed redundancies. Genuine reasons for redundancy can include: the business is failing, the business, or part of it, has stopped operating (often called becoming insolvent or going bust) or your skills are no longer needed [8] cited 8.7.24

• The number and categories of employees at risk. This should include details of which roles are at risk and if you have the option of taking voluntary redundancy.

• The selection criteria for redundancy. Selection pools help to ensure that you are selected for redundancy in a fair way. When a number of different roles are at risk, there will be more than one selection pool.

• How the redundancies will be carried out. You should be offered suitable alternative employment within the organisation if available, or given sufficient notice of redundancy and relevant redundancy pay.

• The calculation of redundancy payments. If you have worked for your employer for two years or more you are currently entitled to, as a minimum, statutory redundancy pay [9] Some employers will have contractual obligations to provide an enhanced redundancy payment, and others may negotiate an additional settlement amount. Cited

The aim of the consultation should be to explore ways to avoid redundancies, reduce the number of employees being made redundant, and mitigate the consequences of redundancies.

What you should expect

Initial announcement

You and your colleagues should be provided with details outlining the situation and the need for potential redundancies.

Selection criteria

Details of the criteria, which should be fair and objective, will typically include performance, attendance records and skills.

Individual consultation

In addition to collective consultation, you should also have individual consultation with your employer.

Notice period

If you are selected for redundancy, your employer must give you a notice period, which could be the statutory notice period. [10] Your contract may entitle you to more notice than the statutory minimum. Cited 8.7.24

How to Prepare for consultation meetings

Stay informed

Keep up to date with all communications from your employer and actively participate in consultation meetings. Understanding the process and your rights is essential.

Seek information and clarity

You will no doubt have questions you wish to ask. It is a good idea to prepare questions before a consultation meeting and write them down to ensure you do not forget them.

Engage with employee representatives

Make sure you communicate with your trade union/employee representative. Remember they are there to represent your interests and can also provide invaluable support and information at a time of worry an uncertainty.

Review your finances

Assess your financial situation and create a budget. Being fully aware of your personal financial position will help you to make informed decisions and prepare for any potential changes in your income.

Plan ahead

Review your CV and update it if necessary. Being proactive about your employability will help to ensure you are prepared and ready to look for new employment and boost your chances of securing a new role.

What can I do if I have concerns?

If you are unhappy with the process or believe it is unfair you should raise your concerns and seek appropriate advice and support. Discuss it with a representative or directly with your employer. If unhappy with the response you can raise a formal grievance [11] cited 8.7.24

Finally

Collective redundancy is a challenging and daunting experience, but understanding the process, your rights, and how to prepare can help to significantly alleviate the stress.

Stay informed, engage with the process, and seek support where needed.

By taking proactive steps, you can navigate what is a particularly difficult time with greater confidence and resilience.

If you are an employee and you need help, advice or support with a collective redundancy process, contact our Employee Support Centre for a free initial consultation or call us on 0333 772 0611