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Collective Redundancies: What are the obligations for employers?

Over the last two years, we have seen household names criticised for their use, or omission to use, the collective consultation obligations under the Trade Union and Labour Relations (Consolidation) Act 1992, most recently TM Lewin and P&O.  In this podcast, our partners, Emma Bartlett and Beth Hale, provide a useful summary of what these obligations are and a discussion on why employers may have avoided using them, and the impact this has had on employee relations, including:

  • On 30 June 2020, TM Lewin dismissed approximately 600 employees simultaneously, with immediate effect and without collective consultation. As a result of the impact that the pandemic had on in person events and working from home, TM Lewin closed 150 stores and moved its clothing retail business online.  Many of the employees appear to have brought claims against TM Lewin & Son (In administration) and the Secretary of State for Business, Energy and Industrial Strategy for compensation for its failure to consult over the redundancies.
  • The collective consultation obligations have been widely discussed in recent months following mass redundancies by employers such as P&O and British Gas.
  • These statutory obligations are triggered where an employer wishes to make redundant 20 or more employees at one establishment (the local unit or entity where workers are assigned to carry out their duties) within a period of 90 days or less. The employer is required to inform and consult with recognised trade unions (if there are any) or the appropriate representatives of employees who may be affected by the proposed redundancy dismissals or by measures taken in connection with those dismissals. The consultation provisions are enshrined in sections 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), which provide for a minimum of 30 days collective consultation if more than 20 redundancies are envisaged or a minimum of 45 days for more than 100 redundancies. Failure to comply with these collective consultation obligations can give rise to a protective award of up to 90 days pay per employee.
  • Different employment tribunals following TM Lewin’s 2020 redundancies have reached different conclusions as to whether TM Lewin breached the collective consultation obligations. TM Lewin’s decision to close 150 stores without collective consultation is substantially similar to the way in which the Woolworths stores were closed; this gave rise to leading case law in this area on the definition of an establishment for collective consultation purposes. What followed was a lengthy employment law debate as to what was an “establishment”, since collective consultation under TULCRA is only triggered where there are 20 or more redundancies anticipated from one establishment.
  • It should not be forgotten that if an employer anticipates that these collective consultation obligations may be triggered, it has an obligation to notify the Secretary of State of the same with details of the potential number of roles at risk of redundancy using Form HR1. Failure to do so can give rise to financial penalties as well as a possible criminal offence.

If you would like to discuss the matters raised in this podcast further or are considering taking steps to implement redundancies and/or other measures, or for guidance on your specific rights, responsibilities and potential liabilities, please contact Partners Emma Bartlett and Beth Hale, both of whom specialise in partnership and employment law issues for multi-national employers, senior executives, firms and partners.