When should an employer start workforce consultation on redundancies?

Most readers will know that consultation with individual employees must be carried out where the employer proposes to make redundancies. The Employment Appeal Tribunal (EAT) recently considered when consultations should be carried out so as to be meaningful. It held that consultation must begin at the formative stage of the redundancy process. This article will explore what this means in practice, but this case will require a re-think by employers considering making ‘small scale’ (less than 20) redundancies.

The claimant was one of 16 recruitment consultants employed by ADP for the purposes of recruiting employees for a single client company. Due to Covid-19, demand for new employees at this client was reduced. As a result, ADP decided to reduce the number of recruitment consultants.

In early June 2020 the claimant’s manager carried out a scoring exercise, ranking all of the employees at risk of redundancy according to a selection criteria. The claimant scored the lowest. On 19 June ADP set a timetable for the redundancy process.

An initial consultation meeting took place on 30 June, along with a further meeting on 8 July and a final meeting on 14 July. The claimant was informed that he would be made redundant at the final meeting.

The claimant‘s unfair dismissal claim included an allegation that ADP had failed to consult properly. He lost at the tribunal but successfully appealed to the EAT.

The EAT referred to existing case law requiring that consultation should take place when proposals were still at a formative stage. In other words, consultation should take place at a time when it can impact the outcome.

In our experience, employers and tribunals have interpreted this requirement more strictly in collective consultation situations (where 20 or more redundancies are proposed) compared to small scale redundancies (less than 20 redundancies).

The EAT rejected the idea that the rules differed between collective and small scale redundancy exercises, unless there are good reasons to start consultation later (e.g. time pressure). In both cases consultation must take place when it can impact the outcome.

The exact requirements will vary depending upon the workforce, nature of the business and reasons for redundancy. But carrying out a selection and scoring exercise before starting consultation, as ADP did, is going to be very difficult to justify in the future. The case also refers to ‘general workforce consultation’. This could mean that wider workforce consultation is required than is currently customary. The approach of only consulting with employees who have been provisionally scored as redundant will also be hard to justify.

So the EAT’s decision will require employers to reconsider their approach to consultation in redundancy exercises. Complying with these requirements would make consultation exercises take longer and unsettle a wider group of employees compared to current practice. Whilst headlines and case reports are made up of dismissals where employees challenge their employers redundancy process, in our experience many employees told they are at risk want matters to be concluded swiftly, to end the uncertainty. In these circumstances it would be unfortunate if such exercises now have to take longer but deliver the same outcome.

(full name of case concerned is De Bank Haycocks v ADP RPO UK Limited).

If you have any questions or would like to discuss anything in this article please speak to one of the employment team on info@ts-p.co.uk.