Collective Redundancy Consultation – case update

Do your employee reps have the required authority for collective redundancy consultation?

In a very important recent decision (Kelly v Hesley Group Limited) the Employment Appeal Tribunal had restated that the statutory collective redundancy consultation rules must be followed strictly. The rules cover more than juts normal redundancy consultation, since “redundancy” is very widely defined. The same principles apply to TUPE consultation, so this case is of some significance.

In Kelly, the employer used an existing Joint Consultative Committee (JCC) to consult about planned changes to employees’ contracts, to reduce working hours, freeze salaries and introduce lower overtime rates. However, as is often the case, the JCC constitution did not give the JCC any negotiating function. It also allowed the employer to co-opt additional representatives to the JCC to ensure that “everyone has their voice heard”. Therefore it was found not to be an appropriate body for collective statutory consultation.

In the light of this case it is clear that employers must ensure that employee reps have a specific mandate for the required consultation/negotiation. Also that the burden of proving that authority is on the employer. Further, it is not enough to provide an “opportunity” for consultation. On the contrary the employer must proactively raise, and discuss, the key statutory issues.

All non-unionised businesses should therefore review the constitution of whatever collective consultation forum (if any) that they have in place, to check that it meets these strict, requirements. Otherwise they risk a hefty financial penalty, in the form of a “protective award” (of up to 13 weeks’ pay per affected employee) for breach of the statutory requirements. They also risk any imposed contractual changes, albeit agreed with their collective employee forum, being set aside. This would, for example, give individual employees good potential claims for unauthorised wage deductions, if their hours of work and/or pay have been reduced, to which there may be no defence.

Many other employers simply do not recognise the need to have appropriate collective consultation mechanisms in place at all. Sometimes this is because they are a smaller business which prefers to simply inform and consult with their whole workforce staff direct. However, that is currently not permitted, and although the Government are planning to give this right to micro businesses (of probably up to 10 employees), any larger employers will continue to be exposed if they have not put in place a properly authorised consultation body, with a clear mandate to deal not only with collective redundancies, and wider restructuring, any statutory TUPE consultation (eg if contracting services, in or out) and/or any workforce agreements under, (eg the Working Time Regulations).

Since such bodies take time to “bed in”, and build trust and confidence between the management and employee reps, it is important to plan ahead, and not wait to introduce just before having to consult. Top level management interest, and buy-in, plus good joint rep training, and a clear constitution, are key elements of a successful, and helpful, forum. Anything half-hearted, and reactive, is unlikely to be effective and can even be counter-productive.