The Chancellor announced last week that the Coronavirus Job Retention Scheme ("CJRS") will be changing from the beginning of next month to allow for employees to return to work on a part-time basis. However, from 1 August 2020 employers will be required to contribute to the wage costs of employees that have been furloughed and the scheme will finally close on 31 October 2020. You can find our updated Q&A with further information here.
Unfortunately, with the end of the scheme in sight and the prospect of sizeable employer contributions, many employers are now being forced to confront the harsh reality of the impact that the COVID-19 pandemic has had on their business. A number of companies have either initiated or started to plan for significant reductions in their workforce. While both the Chancellor and the Prime Minister have indicated that companies should not furlough employees under the threat of redundancy, the CJRS guidance to employees expressly states that "your employer can still make you redundant while you’re on furlough or afterwards" and the corresponding guidance to employers states that employees' redundancy rights continue to apply as normal while they are furloughed. Unlike in certain other countries within Europe, there is currently no prohibition on carrying out redundancies while the CJRS remains available or indeed for any specified period after it has come to an end.
In this article, we consider the statutory framework that applies to large-scale redundancies and look at some of the challenges employers may face in complying with their obligations while the COVID-19 crisis remains ongoing.
The duty to collectively consult
Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULRCA") requires an employer to collectively consult with appropriate representatives of affected employees where it is proposing to dismiss as redundant 20 or more employees at a single establishment within a period of 90 days or less. Such consultation must begin "in good time" and no later than 30 days (where between 20 and 99 redundancies are proposed) or 45 days (where more than 100 redundancies are proposed) before the first dismissal takes effect. It is likely the collective consultation process may take longer than usual in the current circumstances and employers should allow for additional time to ensure that the process can be undertaken meaningfully.
In the current climate, as many employers implement or consider implementing short-term cost saving measures, such as a reduction in hours and/or pay or suspension of benefits, as alternatives to redundancy, it is important to be mindful that the definition of "redundancy" for the purposes of section 188 is quite broad. A redundancy in this context encompasses any reason for dismissal which is not related to the individual concerned. Based on the current case law, it would arguably include situations where an employer intends to change terms and conditions to employees' detriment by way of dismissal and re-engagement. In addition, it may also include situations where an employer seeks consent to a detrimental change to terms and conditions for reasons not related to the employee, where insufficient take-up of the proposal may lead to 20 or more redundancies.
Most employers are currently in the planning stages of their post-COVID-19 recovery plans. There is extensive case law as to what constitutes a proposal within the meaning of section 188 of TULRCA. It is clear that the duty to collectively consult can arise in the early stages of the decision-making process and possibly even before numbers of potential redundancies and affected business areas are finalised. Notwithstanding the current state of economic uncertainty, during which redundancy plans are likely to be subject to change, it is prudent to start collective consultation as early as possible. As outlined below, the process is likely to take longer than usual and there is the potential for serious consequences if consultation is started too late. This includes possible criminal liability for the employer and senior personnel as regards any failure to notify the Secretary of State.
The start of consultation
There have been reports in the press of companies beginning collective consultation while employees remain on furlough, with a view to dismissing them when the CJRS comes to an end (or possibly from 1 August when employers must start contributing to the wage costs for any unworked hours). The clear advantage of initiating collective consultation while employees remain on furlough is that the business can start the clock on the 30 or 45 day period, referred to above, during which dismissals cannot take effect. The CJRS guidance does not confirm whether participation in collective consultation would amount to employees "providing services to or generating revenue for" their employer, which are expressly not permitted under the scheme at least until 1 July. In our view, this is unlikely to be the case, especially as the guidance expressly states that employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers whilst on furlough.
Notwithstanding the above, companies should consider carefully the potential negative PR consequences of threatening redundancies while employees remain on furlough. A decision to proceed with consultation while employees remain furloughed may be more justified for companies in industries or sectors that have been severely impacted by the COVID-19 crisis and are unlikely to recover once lockdown measures have been lifted. Nonetheless, even British Airways recently faced public criticism (including in Parliament) when it initiated collective redundancy consultation with approximately 12,000 employees who were furloughed under the CJRS.
Election of employee representatives
Where an employer does not have existing trade union representation or a standing body of employee representatives, it will be necessary for the affected employees to elect employee representatives for the purposes of the collective redundancy consultation. Section 188A(1) of TULRCA set outs the requirements of such an election. Employers may face a number of logistical challenges in complying with these requirements in the current circumstances, where most employees continue to work from home and social distancing measures must continue to be observed. Some key considerations to bear in mind include:
- It is up to the employer to determine the number of employee representatives to be elected. However, there must be sufficient representatives to represent the interests of all the affected employees, having regard to the number and classes of those employees. In view of the fact that collective consultation is likely to take place remotely, via video conferencing and/or email, it may be preferable to have more representatives than usual, so that they can effectively communicate with the affected employees they represent.
- Where the number of candidates nominated is the same or less than the number of representatives sought by the employer, a ballot may not be necessary. However, if the number of candidates nominated exceeds the number of representatives sought, the employer will be required to hold a ballot.
- An online voting platform is likely to be most suitable in view of the current social distancing restrictions in place. Asking employees to attend the office in order to vote is likely to impact the fairness of the election, assuming a number of employees will be reluctant or even unable to do so.
- It is important that all affected employees are given the opportunity to stand for election and are entitled to vote. Therefore, you should ensure that they all have access to adequate IT facilities and are able to submit their nominations and/or vote.
- The election may take longer than usual and sufficient time should be allowed for employees to nominate either themselves or other affected employees. In particular, you may want to provide time for employees to check that any employee they choose nominate is happy to stand for election.
- The requirements state that "so far as is reasonably practicable, voting must be in secret". While some employers engage third parties to conduct anonymous workplace ballots, it may also be acceptable to limit who has access to the online results, perhaps nominating a single person within HR to review these.
There is nothing in principle which prevents the collective consultation process from taking place remotely. Once the employee representatives have been elected, section 188(5A) of TULRCA requires an employer to provide them with access to the affected employees and with such accommodation and other facilities as may be appropriate. In light of the current situation, employers will need to take extra care to ensure that they facilitate effective communication between the representatives and the employees they represent, perhaps by creating email groups or internal intranet sites so that information can be shared easily. It will also be important to ensure that confidentiality is maintained at all times and that data protection principles are adhered to. In most cases, the obligation to provide accommodation and facilities will be satisfied by ensuring that the employee representatives have adequate IT and conferencing facilities.
Consultation meetings with employee representatives are likely to take place via video or audio conferencing. From a practical perspective, employers should consider the following:
- Where there are a significant number of participants, it will be useful to clarify at the outset of each meeting how it will be run including when and how questions should be raised.
- Employers should be mindful of scheduling meetings that are too long and it will be helpful to circulate an agenda ahead of each meeting to allow for any key issues to be prioritised.
- Detailed minutes should be taken of the meetings so that there is a clear record of what is discussed and these should be circulated to the employee representatives for their feedback via email.
- It may be the case that shorter but more frequent meetings are more appropriate in order to facilitate meaningful discussions with the representatives while also allowing them some time to seek feedback via email from the affected employees they represent.
There are additional considerations for employers with respect to confidentiality and information security when sending documents to the employee representatives by email. While it might usually be possible to share information relatively informally at meetings in person, documents emailed to representatives should be marked as confidential and it should be made very clear when they are not for onward circulation. In particular, the employer should make clear when information or responses to queries can be passed on directly to the affected employees. In any event, it is better to proceed on the basis that the representatives may forward on emails received from the employer directly to the affected group and any correspondence should be drafted with this in mind.
Similarly, even if employee representatives are expressly instructed not to record online meetings, they may do so anyway without the employer's knowledge. This should be borne in mind when communicating with representatives.
A final note on PR
A number of businesses have recently received negative press attention due to rushed and insensitive redundancy procedures arising from the COVID-19 crisis. In an age where employees are not afraid to speak their mind on social media, company decisions and processes are under increased scrutiny and it doesn't take much to inadvertently make the headlines. The importance of careful advance planning of any large-scale redundancy exercise cannot be overstated.
Employers should think carefully about the potential economic hardship that employees may be faced with in the current climate and consider whether to offer them any additional compensation or benefits on termination of their employment. A thoughtful (and not necessarily expensive) termination package that focusses on assisting employees in their search for alternative work may be the difference between being hailed as an example of how to get it right versus ending up as the subject of a bad news story or a twitter rant that goes viral.
Last reviewed: 04 June 2020