Is Collective Consultation needed for a small business?

Following a recent online event run by the Federation of Small Businesses several small business owners asked me about redundancy consultation. The prospect of Collective Consultation lasting 30 or 45 days was quite daunting and costly to them in their situation of needing to reduce staff numbers quickly, often to secure their company’s survival during what will clearly be a very difficult next few months.

So I thought this may be a useful subject to clarify on this week’s blog.

Although I am not directly LinkedIn with a huge number of small business owners as yet, hopefully this article will reach relevant people through others ‘liking’ my post, or simply reading it and then being a little more informed in general conversation with business owners in the coming weeks.

To clarify, the requirement to consult Collectively for 30 days or more before giving notice of redundancy to any employees only applies where 20 or more redundancies are being proposed at any ‘establishment’ in a 90 day period.

An ‘establishment’ would normally mean the company in general but can be individual premises e.g. shops, restaurants or pubs, if they are run pretty much autonomously. 

Thankfully, most SMEs do not need to make 20 or more redundancies at present and therefore the 30 day rule does not apply and the process can be completed in a significantly shorter timeframe.

Where a company needs to make less than 20 redundancies in a 90 day period there is no fixed or minimum consultation period, it depends on what is appropriate in the circumstances and that can be judged by the individuals who are managing the process.

Also, with regards to the type of consultation that must be carried out, where a relatively small number of redundancies are proposed it is acceptable to carry out Individual consultation i.e. meet individuals separately to consult with them rather than elect Representatives to carry out Collective consultation.

Clearly if numbers start to get into double figures then you may wish to consider Collective consultation rather than carrying out individual meetings, for logistical reasons, and accept that that will lengthen the process while you carry out a secret ballot to elect Representatives before starting the consultation process.

When consulting individually with those affected it is possible to carry out the whole process in 7-10 days as long as the following minimum requirements are actioned with each individual. The company needs to have:

• quoted the reason for redundancy.
• formally invited the individual to a consultation meeting to discuss redundancy.
• allowed the individual to bring a work colleague or union Representative to the meeting.
• discussed the proposed redundancy and given the individual sufficient opportunity to raise any points they wish, including alternatives to redundancy.
• notified them of the decision in writing. This letter would also normally give formal notice of redundancy.

Once the above actions have taken place, individuals must then be given the chance to appeal against the outcome with the option of having a work colleague or union Representative present at the appeal hearing.

So legally this may be sufficient in terms of the process followed. However, whereas it is ‘possible’ to complete the process in 7-10 days by following the above, ACAS stress that the consultation must be ‘meaningful’. Therefore the process may need to be extended depending on what points are raised by individuals as, if you cannot show that the consultation was genuine and meaningful, and any points raised have been fully considered then you are likely to lose a Tribunal.

At 186hr we recommend following a fifteen day process for Individual redundancy consultation, see 8 Steps to Making Redundancies for details. Business owners have told us that, whereas they need to reduce costs quickly at present, they wish to do it fairly and also to be seen by their remaining employees, customers, suppliers etc to have acted fairly and empathetically. The 186hr 15 day process has been shown to achieve all of those desired outcomes.

We have put together a ‘Practical Guide to Making Redundancies’ which includes guidance at each stage of the redundancy process, model Word based documents for you to copy, paste and adapt to your circumstances and also 2 hours of telephone based consultation with a highly qualified Senior HR Manager to answer queries and further tailor any documents to your needs. A free abridged version of the document can be viewed here.

If you or any business owners you know need any further information please do not hesitate to contact us.