Following on from the employment team’s recent blogs on Coronavirus, a common concern of employers at the moment is in relation to making employees redundant. Employers may require to do this if they no longer have a need for employees in the workplace due to a decline in business or if the business has to close. Sadly, in the current climate this may be the case for many businesses.
Employers may wish to first look at voluntary redundancies however, this may not be a viable solution where employees consider the long-term effect of redundancy and the difficulties they may encounter finding future work in the current climate. Financial constraints will also be an issue as voluntary redundancy tends to cost more.
It is important that employers follow a fair procedure when consulting regarding any redundancies as, failure to do so, could result in claims of unfair dismissal and/or failure to consult. Ordinarily, when more than 20 redundancies are being proposed by the employer within 90 days or less, the Employer must follow a fair procedure and follow ‘collective consultation’ rules. They must consult for a minimum of 30 days before the dismissals are to take place with either the trade union or elected employee representatives. Where 100 or more employees are being made redundant then they must consult for a period of at least 45 days. A failure to meet these collective consultation obligations can allow each affected employee to claim at tribunal for a protective award (90 days’ pay).
There is statutory defence available to employers whereby, if there are special circumstances which mean that the employer is unable to comply with the procedure outlined above, then they must simply take reasonable steps to comply and consult regarding the redundancies.
Some legal commentators have advised that the current rapid spread of Coronavirus could qualify as a special circumstance whereby employers would not require to follow the strict timeline detailed above and instead take all reasonable steps to consult regarding the redundancies. The spread of Coronavirus could qualify as a sudden disaster that has led to a decline in business and the potential closure of some businesses. However, if businesses wish to plead special circumstances in this instance then it would be advisable to begin consulting regarding any redundancies as soon as possible as delaying this may erode the suggestion that this is a sudden disaster.
In order to plead special circumstances, the employer must prove that the particular circumstances existed and further show the circumstances made it impractical to fully consult in accordance of the rules. Presently, provided that employers act quickly, there is an argument that the special circumstances test would be met. Of course, if employers can comply with the 30/45 day requirement, they should.
It is worth highlighting again, however, that pleading special circumstances does not remove the requirement for consultation from the employer completely and the employer must still take all steps that are reasonably practicable towards complying with the normal collective consultation rules. If the employer takes all reasonable steps towards compliance, this will provide a defence in the event that a claim is made against them regarding the fair procedure.
There are no statutory rules for situations where fewer than 20 redundancies are planned, however, it would be good practice to follow a fair procedure and consult fully with employees and their representatives in order to prevent any future claims for unfair dismissal. Consultation includes giving employees fair warning of potential redundancies and holding individual meetings with each employee (ideally two meetings at least 7 days apart) to consult about how redundancy might be avoided.
In any event, employers should take legal advice in order to ensure that they are following the correct procedures. If you are in any doubt of your obligations as an employer, please get in touch with the Blackadders Employment Team.
Donna Reynolds, Partner
Accredited by the Law Society of Scotland as a Specialist in Employment Law & Discrimination Law
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