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Collective Redundancy Consultation

Posted on 21 April 2015

Following a government report into the collapse of City Link and its failure to consult with redundant employees, The Department for Business, Innovations and Skills (BIS) has issued a call for evidence.

BIS is keen to understand what happens when a business is facing a formal insolvency procedure.

In its report, it states "it is clearly in the financial interest of a company to break the law and dispense with the statutory redundancy consultation period if the fine for doing so is less than the cost of continuing to trade for the consultation period and the fine is paid by the tax payer". The report goes on to say that whilst the financial calculation is simple, the high human cost does not appear to have featured in the decision making process.   

Currently the collective consultation procedure must be followed in a redundancy situation where you are making more than 20 employees redundant within a 90 days period at a single establishment. The rules are as follows:

  • Redundancy Payments Service (RPS) to be notified before a consultation starts
  • Consult with trade union/elected employee representative or directly with staff
  • Provide the above with detail of planned redundancies and time to consider them
  • Respond to requests for further information
  • Give any affected staff termination notices showing the agreed leaving date
  • Issue Redundancy Notices once the consultation is complete  

For further information regarding the responsibility of directors and the rights of employees in a redundancy please contact Byrne Associates Southwest insolvency and business recovery team

 

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It is important to take early advice - whilst all options are still open. The longer matters are left, the less control you will have over the outcome, and the harder it becomes to save a business

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