If collective consultation is required, and there is a well established Employee Forum, the organisation may decide to use the Employee Forum Representatives, or a particular area of the Forum, to inform and consult over proposed changes. In these situations, the business will expect them to attend collective consultation meetings and represent the views of their colleagues in relation to the proposed changes, in order to influence the approach prior to any decisions being madeIn the event of the Employee Forum being used in this way, members of the Forum should receive training on how to be an elected representative for statutory consultation purposes.

Redundancy

Redundancy is actually a form of dismissal and many of the general rules about when dismissals are fair apply to redundancies. The law says that redundancy is a potentially fair reason for an employer to dismiss an employee, but for a redundancy dismissal to be lawful an employer must have followed a fair procedure before proceeding to dismissal. Fair and objective criteria must be used when selecting employees for redundancy. The usual laws relating to discrimination also apply so it’s unlawful to select an employee for redundancy because of their sex, race, sexual orientation, disability, age, religion or belief or because they are a member of a trade union.

The employer should meet with an employee to explain why they have been selected for redundancy, explore any other employment options and allow the employee to appeal any redundancy decision. Unlike other forms of dismissal an employer must consult with workplace representatives before making groups of employees redundant.

Redundancies occur when an employer reduces the size of their workforce. This is usually due to one of two reasons; the workplace is closing or fewer employees are required to do work of a particular kind. Dismissing employees and immediately recruiting new ones would not normally be classed as redundancy, but it’s not automatically unlawful. The new employees may be taking up different posts (or the same posts in a different location) or there may have been an unexpected change in business prospects – a successful tender for a large corporate pension scheme for example.

The Legal Process for Consultation

There are legal requirements an employer must follow before making employees redundant. In simple terms these are as follows;

  • must follow a redundancy dismissal procedure during which the employee must be given the reasons for redundancy and what alternative employment opportunities are being explored
  • must give notice of redundancies and formally consult where they are considering making more than 20 employees redundant over a period of 45 days
  • most employees with more than 2 years’ service are entitled to redundancy pay
  • must not select redundant employees on the basis of their gender, race, disability, age unless objectively justified, sexual orientation, transgender status, religion or belief, pregnancy or trade union membership

Failure to follow these requirements could mean that the employer is unable to make the redundancies or may have to pay compensation due to unfair dismissal. In addition, employers should provide time off for job hunting or training.

If the number of redundancies is 20 or less there is no legal obligation to consult, in which case the statutory dismissal procedure must be followed.

When an employer is considering making more than 20 employees redundant over a 45-day period they are legally bound to consult with employee representatives. The content of the consultation must include:

  • the reasons for the redundancies
  • the numbers and descriptions of those affected
  • ways of avoiding redundancies or reducing the numbers affected
  • where a workplace is closing, the reason for closure
  • the proposed method of selecting those to be made redundant
  • how any enhanced redundancy payments are to be calculated

In addition, there are minimum periods for consultation depending on the proposed number of redundancies:

  • for 20 to 99 employees, consultation must last at least 30 days
  • if 100 or more redundancies are proposed then consultation must last at least 45 days

Consultation is an opportunity for the employer to pause for thought and consider alternative proposals submitted by employee representatives. There is no obligation to reach agreement by the end of the consultation period but the employer must consult “in good faith” with a view to reaching agreement. Individual notices of redundancy cannot be issued until the minimum period for consultation has expired. Failure to consult properly or issuing notices of redundancy before consultation ends (30 or 45 days) can result in a claim to an employment tribunal. Justified complaints can result in a protective award being made which requires the employer to pay employees normal pay for the period covered by the protective award (30 or 90 days).

The employer should also consult with each individual employee as redundancy dismissals may be unfair if consultation has only taken place with employee representatives.

The process for selecting employees for redundancy must be fair and non-discriminatory, otherwise there may be a claim for unfair dismissal. Selection cannot be made on grounds of sex, race, disability, age (unless objectively justified), sexual orientation, transgender status, religion or belief, pregnancy or trade union membership.

The following can be taken into account though:

  • skill and capability
  • attendance record
  • conduct record e.g. disciplinary warnings/action plans
  • type of work to be done by those remaining

Employees are entitled to know what factors have been used in the selection process and ideally these will have been agreed with employee representatives.

Alternative Employment or Work Hours

Employers have some responsibilities to assist employees in finding other employment. This may be suitable alternative employment within the same organisation or an associated company. If an employee unreasonably turns down a suitable alternative position then they are no longer legally redundant and would be in the same position as if they had resigned.

An employee will lose their redundancy rights if:

  • their employer (or associated employer) offers a suitable alternative job before the current contract expires, it starts within 4 weeks, and the employer makes the offer in writing

An employee can reject a job that is clearly unsuitable, but can agree to a trial period to assess suitability. There are basic rules about this too:

  • trial periods are usually for 4 weeks, but can be extended if retraining is required (there should be an agreement in writing to the actual period)
  • if the trial period is successfully completed the employee is therefore deemed not to have been made redundant
  • if the employee rejects the new job before the end of the trial period because it turns out to be unsuitable, or for good personal reasons, redundancy will be considered to have started the day the old job ended

It should be noted that if there is disagreement between employer and employee over suitability of the new job the employer may refuse to pay redundancy. This could result in a claim to an employment tribunal and it would be up to the employee to show why the job was unsuitable. If the tribunal agrees with the employer then the employee will lose all rights to a redundancy payment.

If the employer is proposing a change to an employee’s contract  - e.g. by changing work hours or patterns, or changing pay or other terms and conditions of employment – this will only be lawful if the employer has agreed any change with the employee representative body. An unauthorised, unilateral variation is a breach of the contract of employment.

If an employee is selected for redundancy and has worked continuously for the same employer for a minimum of 2 years on the date notice expires, the law says that they are entitled to reasonable paid time off to look for work or training. The law doesn’t give a specific amount of time to be deemed as “reasonable” and any dispute over this could only be settled in an employment tribunal. Generally, a sensible and realistic attempt to find work or appropriate training is likely to be deemed “reasonable”.  Normal pay should be paid for reasonable time off, though the law allows an upper limit of 2/5 of a week’s pay to be applied.

Collective Consultation in Practice

If we take the example of more than 20 employees at risk of redundancy as our basic scenario then collective consultation is, in its simplest form, a two-step process which begins with an informal pre-consultation discussion between, typically, the senior management of the affected area(s) and senior Staff Representatives from the same area(s).  The pre-consultation meeting (or meetings as this isn’t limited to 1 meeting) allows the company an opportunity to explain the rationale behind their review of the current organisational structure and, if appropriate, all options considered. There should be an indication of the proposed timeframe to complete the process and all relevant material relating to the company’s current position should be provided. Basically, pre-consultation is a “heads up” to the Staff Representative body about potential redundancies.

The second step is to enter into formal collective consultation and this signals the start of the 30 or 45-day period. The collective consultation will focus on:

  • consultation on the proposals
  • alternatives already considered but not believed to be viable
  • the impact on employees
  • reasons why redundancies are proposed
  • suggestions on how to mitigate redundancies

The company should disclose, in writing, certain information:

  • reasons for proposed redundancies
  • definition of ‘establishment’*
  • numbers and descriptions of affected employees
  • the proposed time period over which dismissals will take effect
  • the proposed selection process and how employees are to be pooled
  • how dismissals are to be carried out
  • the method of calculating redundancy payments

Collective consultation will usually begin on the day the company announces its proposals to employees identified as at risk of redundancy. Appropriate managers will make this announcement and explain the business proposals, the collective consultation process and period (30/45 days), how employees should feedback on the proposals and when individual consultation will begin. Affected employees should also receive relevant documentation at this stage such as:

  • business rationale for the proposed changes
  • staff guide
  • structure charts
  • copy of any presentation slides
  • Q&A document

The company should individually consult with all employees whose role is at risk of redundancy. This includes those who are absent from their role for whatever reason (maternity, illness, secondment). Individual consultation can be run in tandem with (but not before the start of) the collective consultation process. Employees at risk of redundancy should be given adequate time to absorb, process and respond to the formal announcement that their role(s) are at risk of redundancy before entering into individual consultation. This will facilitate a more meaningful discussion between the individual and their manager.

In much the same way as the collective consultation, the purpose of the individual consultation is to advise an employee that they are at risk of redundancy, discuss any ways to avoid or mitigate this and consider options for alternative employment, retraining or outplacement support. The manager should do the following throughout the individual consultation process:

  • provide the employee with additional, relevant information about the proposed changes
  • explain how the proposed changes affect the individual employee
  • allow the employee to air their views, ask questions and discuss their circumstances
  • confirm that their role is at risk of redundancy
  • ensure the employee understands the proposed method of implementing the proposed changes
  • discuss all options available to the employee

The individual can be accompanied by a Staff Representative or a certified Trade Union official.

There are 3 main stages in the individual consultation process:

  • initial consultation meeting
  • provisional outcome meeting
  • final outcome meeting

In a redundancy situation, one of the following scenarios will apply:

  • the number of employees required to perform a particular task is to be reduced – this is known as a diminished requirement
  • a particular role is no longer required – these are known as redundant posts

There may be other employees in the affected area(s) who are not at risk of redundancy and fall within one of the following categories:

Unaffected – the proposed changes have no impact on their role

Matched – new roles that are materially the same have been identified in the new structure and individuals will move across and be ‘matched’ into them

A selection pool is a group of employees who are currently performing the particular role that will either cease or diminish. All employees within a pool should perform the same or substantially similar role and may not necessarily be from the same department or division. For example, if the proposal was to reduce the number of secretarial support staff, this could encompass the entire company as the functions and skills are interchangeable and not specific to any one department, though clearly location would be a factor in any pooling exercise.

Legislation doesn’t define selection pools so this is a matter for collective consultation.

Communication

Employees will expect representatives to keep them updated with any relevant information, so they should be familiar with the proposed changes and have considered how they will impact upon employees (remember that those not at risk of redundancy but impacted by the proposals need to be included). Employees will be interested in: 

  • the changes and what they mean to them
  • the timescales for key stages of implementation
  • having the opportunity to ask questions and make suggestions
  • having the opportunity to raise queries on a confidential 1 to 1 basis
  • understanding the role of an Employee Rep
  • their options if they do not agree with the proposed changes

Objectivity

It’s extremely important for representatives to remain objective throughout any consultation process, particularly so when there is a risk of redundancies and doubly so if the representatives themselves are included as part of a selection pool. If there is any risk of a representative’s objectivity being compromised or questioned by other eligible employees then it should be considered whether withdrawing from the collective consultation team is the best course of action for the representative concerned and allowing another Staff Representative to take over.

Representation

Just a reminder that Staff Representatives represent employees, which includes managers delivering the message. This can be a difficult challenge as redundancy situations are often divisive and can cause views to be entrenched along staff/management lines. Representatives should maintain objectivity and impartiality at all times and endeavour to complete the collective consultation process with due diligence and pragmatism.

Confidentiality

It is imperative that confidentiality is maintained at all times and that information is only given to relevant parties at the appropriate time. Employees impacted by a redundancy programme will naturally be concerned with securing the best outcome for themselves and any hint of favouritism or different standards of service may result in claims of bias. Obviously, this is to be avoided at all costs.

 

TUPE - Transfer of Undertakings (Protection of Employment) Regulations

What is TUPE?

The purpose of TUPE is to protect employees if the business in which they are employed changes hands. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law.

TUPE is an acronym for the Transfer of Undertakings (Protection of Employment) Regulations. The Regulations were first passed in 1981 but overhauled in 2006. TUPE is a significant and often tricky piece of legislation adopted by the UK in order to implement the European Acquired Rights Directive.

TUPE applies every day to an enormous number of different business transactions. TUPE can apply (to name but a few of many examples) when employers:

  • sell or buy part or all of a business as a going concern;
  • outsource or make a "service provision change" involving either (a) an initial outsourcing of a service (e.g. where services transfer from the customer to an external contractor); (b) a subsequent transfer (e.g. where services transfer from the first external contractor to a different external contractor; and (c) bringing the service back in-house (e.g. where services transfer from an external contractor back to the customer);
  • grant or take over a lease or licence of premises and operate the same business from those premises.

When is TUPE likely to apply?

In essence, TUPE applies where there is a "relevant transfer". The 2006 Regulations clarified complicated case law to determine that a relevant transfer means the "transfer of an economic entity which retains its identity". In determining whether this has happened, the courts take into account factors such as:

  • the type of undertaking being transferred;
  • whether any tangible assets (buildings, moveable property etc.) are transferred;
  • whether any intangible assets are transferred and the extent of their value;
  • whether the majority of the employees are taken on by the new employer;
  • whether any customers are transferred;
  • the degree of similarity between the activities carried on before and after the transfer;
  • the period for which the activities were suspended, if any.

The question of exactly when TUPE does and does not apply is a very complex one. If you think a transaction you are involved in might be covered by TUPE you should always take specialist legal advice. Virtually all service provision changes are covered so it is safe to assume that TUPE applies to most outsourcing without the need for protracted legal argument. However, because of the uncertainty surrounding when TUPE applies, it is common for this issue to be regulated by contract.

What does TUPE mean legally?

Employees who are employed in the undertaking which is being transferred have their employment transferred to the new employer. Employees can refuse to transfer (or "opt-out"), but depending on the circumstances of the case, they can lose valuable legal rights if they do. TUPE states that "all the transferor's rights, powers, duties and liabilities under or in connection with the transferring employees' contracts of employment are transferred to the transferee". This all-embracing concept encompasses rights under the contract of employment, statutory rights and continuity of employment and includes employees' rights to bring a claim against their employer for unfair dismissal, redundancy or discrimination, unpaid wages, bonuses or holidays and personal injury claims etc.

Employees therefore have the legal right to transfer to the new employer on their existing terms and conditions of employment and with all their existing employment rights and liabilities intact (although there are special provisions dealing with old age pensions under occupational pension schemes). Effectively, the new employer steps into the shoes of the old employer and it is as though the employee's contract of employment was always made with the new employer. For this reason it is essential that employers know all about the employees they might inherit if they are planning to take over a contract or buy a business and that they make sure that the contract protects them from any employment liabilities which arose before they became the employer. This is helped by the fact that the old employer is required to provide to the new employer written details of all employee rights and liabilities that will transfer (see below).

For example, if Company A plc has been carrying out a contract to supply an insurance company with IT services and then loses the contract to Company B Ltd, Company B Limited will not only take over the contract to supply IT services, but will also inherit all the employees of Company A plc who were formerly involved in supplying the IT services to the insurance company. If Company A plc has failed to pay its employees their wages for the past few weeks, Company B Limited will inherit the liability to the employees for the unpaid wages under TUPE.

Any dismissals will be automatically unfair, where the sole or principal reason for the dismissal is the transfer. This is also the case where the sole or principal reason for the dismissal is a reason connected to the transfer, unless it is for an economical, technical or organisational reason (an "ETO" reason) requiring a change in the workforce. This ETO defence is narrow in scope and can be difficult to rely upon. Even if the employer can rely upon an ETO defence and the dismissal is not automatically unfair, it may still be unfair for other reasons (such as a failure to consult properly in a redundancy situation).

As the new employer is required to take on the employees on their existing terms and conditions of employment, it is prohibited from making any changes to the terms and conditions of employment of the transferred employees if the sole or principal reason for the variation is the transfer. This is also the case where the sole or principal reason is connected to the transfer, unless there is an ETO reason for the change, usually requiring a change in number of the workforce. This often makes it difficult, if not impossible, for incoming employers to harmonise terms and conditions of employment of staff after a TUPE transfer.

Where an independent trade union has been recognised by the outgoing employer in respect of transferring employees, recognition will transfer to the incoming employer to the same extent.

What do you need to do to comply with TUPE?

(1) Outgoing employer must inform and consult with staff

Employers involved in a business transfer must inform appropriate representatives of the affected employees of the transfer and any measures proposed, and must consult on any proposed measures. Certain specified information must be provided to the representatives long enough before the transfer to enable the outgoing employer to consult with them about it.

If there are any changes or proposals for changes following the transfer, these "measures" will have to be discussed with the representatives of the affected employees. The incoming employer is required to provide the outgoing employer with information on proposed measures to allow the outgoing employer to comply with its duty to inform and consult. There is no set timetable for consultation, but the larger the transaction and the more staff affected, the longer the timetable will need to be.

If there is a failure to inform and consult, a complaint can be made to the Employment Tribunal. If successful, the Tribunal can award whatever compensation it considers just and equitable having regard to the seriousness of the employer's failure up to a maximum of 13 weeks' pay per affected employee. Information and consultation failures can result in joint and several liability between the outgoing and incoming employers, although the contract governing the transfer can cater for apportionment of liability here.

(2) Outgoing employer must provide employee liability information to incoming employer

The outgoing employer has a duty to provide the incoming employer with written details of the transferring employees (including identity, age, particulars of employment, disciplinary and grievance records, employee claims and collective agreements) together with all associated rights and liabilities that will transfer. This information must be given not less than 14 days before the transfer, although in practice the incoming employer will aim to attain this information much earlier.

If there is a failure to comply with this duty by the outgoing employer, the incoming employer can apply to the Tribunal for compensation which will be assessed with regard to the losses suffered with a minimum award of £500 per employee.

A failure to comply with TUPE could therefore expose employers to claims large enough to undermine the entire transaction.

What other practical steps can you take to protect your business from the effects of TUPE?

There are steps which both the outgoing and incoming employers can take to divide up TUPE liabilities contractually between them. Whilst under TUPE employment liabilities connected to the transferring employees will always transfer to the incoming employer (so employee claims should always be made against the new employer), the parties can still agree contractually to divide up the liabilities between them in a different way. This ought to be done by means of contractual indemnities. If this is something you think would be useful for your business, you should always take specialist legal advice.

The purpose of an Employee Representative is:

  • to ensure all staff affected understand the strategic narrative.
  • to contribute to high quality communication to staff affected by providing information and context that will enable staff to understand why this is happening. 
  • unpick the “what”, the “why” and the “what else” – the other options considered but rejected.
  • provide staff with influence via the employee voice having created an environment where that employee voice will be constructive.
  • to listen to, understand, filter and voice the informed opinions of staff which affect the organisation as a whole or which affect a significant group within the organisation.
  • to support constituents with other minor concerns or individual issues by directing them to their line manager.

 The responsibilities of a TUPE/Redundancy representative are:

  • to create an informed workforce which can contribute ideas to the operational implementation of strategic decisions.
  • to develop closer communication links and trust between management and staff, promoting two way understanding with the new organisation.
  • to develop a deeper understanding of business strategy and performance amongst their colleagues.
  • to present ideas, options or alternatives in discussions.
  • to respect the confidentiality of matters and individuals.
  • to raise personal issues regarding yourself or a third party with an appropriate manager and not consultation meetings.

Tips for the TUPE/Redundancy Representative

  • familiarise yourself with the legislation.
  • understand that you will be unlikely to take issue with the organisation in terms of its legal obligations.
  • make sure both organisations are being fair.
  • establish what you can and can’t influence straight away.
  • remember that it will be better for all individuals if they transfer in a positive, engaged state of mind.