Introduction

A clear understanding of redundancy law and associated workers’ rights has never been more important than in the current economic climate. As this booklet goes to press, the Office for National Statistics has published its latest Labour Market Survey figures for the three months to July 2011. These indicate a sharp rise in both voluntary and compulsory redundancies, with 162,000 more redundancies across the workforce as a whole, up 47,000 on the preceding quarter.

Whereas the bulk of initial job losses at the start of the economic downturn fell either in manufacturing and construction or other sectors dominated by the private sector, this latest wave of redundancies is concentrated in the public sector, with the most recent figures indicating a loss of 111,000 public sector jobs between March and June 2011, the largest fall in public sector employment since comparable records began in 1999. Over the same period, only 41,000 new private sector jobs were created. Women are bearing the brunt of this increase in redundancies reflecting their strong presence in the public sector. Women’s unemployment is now at its highest level for 23 years. Employees and their representatives have a number of legal tools at their disposal to respond to redundancies. The most important of these is the legal requirement on employers to engage in fair consultation. Employers who fail to engage in genuine consultation (for example, by privately deciding at board level to cut jobs before raising this possibility with employees) are vulnerable to a costly challenge in the Employment Tribunal.

The law can change quickly and significantly as seen most obviously in changes to the statutory consultation obligation. Employment law is not static and it adapts in response to changes in industrial relations behaviour and context. For example, early responses to the downturn included many collaborative attempts to retain workers in a variety of ways, such as achieving innovative savings elsewhere in the organisation, recruitment freezes, pay freezes, retirement, redeployment, cutting any agency workforce, reducing overtime and introducing more flexible approaches to time (such as annualised hours), temporary short-time working and temporary lay offs.

Employers are beginning to recognise the high costs of losing experienced and skilled workers and the need to be ready for the upturn when it comes. This approach has rightly created an expectation in the minds of unions and workers that the employer’s statutory obligation to consult on “ways of avoiding redundancy” will extend to consultation, with a view to reaching agreement, on all available ways of avoiding redundancies in any given scenario, before reaching a final decision to cut jobs. And a breach of this statutory obligation exposes the employer to liability to pay a substantial protective award.

An important union victory in UK Coal Mining v National Union of Mineworkers decided that employers are obliged to consult with employee reps on the business reasons for making redundancies, although the exact scope of the consultation obligation will soon be under renewed scrutiny following a recent referral of the issue to the European Court of Justice (ECJ) in United States of America v Nolan.

Unions have experienced both good and bad practice in relation to consultation over the last two years, perhaps the worst example being the current trend among employers, particularly local authorities, to hold a gun to the heads of staff by carrying out mass dismissals whilst simultaneously offering new worsened contract terms and conditions.

During challenging times, unions can re-assert their relevance and demonstrate the benefits to workers of achieving recognition across the workforce. Time and again practical experience and case law highlights the organisational benefits of effective independent consultation, often resulting in significantly fewer compulsory redundancies than were originally envisaged. Poor consultation leads to bad commercial decisions, short-term “crisis management” and badly damaged morale. A survey in August 2009 by professional human resources organisation the Chartered Institute of Personnel and Development (CIPD) of 3,000 employees who had survived redundancy highlighted a “fundamental lack of trust in UK plc senior management”, with more than a fifth of workers so unhappy about the handling of redundancies that they planned to change jobs as soon as the economy improved.

This booklet is designed to present the law on redundancy in a clear and concise manner. It explains how to handle a redundancy situation and sets out the circumstances in which employers have a duty to carry out collective consultation with trade union or other employee representatives, as well as the mechanics of individual consultation. It gives examples from workplace agreements of common selection criteria used and explains employers’ obligations to offer alternative employment. It also summarises the statutory redundancy pay scheme, explaining how this and occupational redundancy schemes have been affected by changes such as age discrimination law and the abolition of the default retirement age.

The booklet is aimed not only at reps who are based in a workplace where a union is recognised but also at union members working in a non-unionised setting. One by-product of the fragmentation likely to result from the coalition government’s “Any Willing Provider” model of outsourcing services from the public to the private sector is that over the coming years, a growing number of union members are likely to find themselves isolated in a non-unionised setting, often working for much smaller and less well-resourced employers, with perhaps only a distant prospect of union recognition.

These members can still participate actively in the collective consultation process, where 20 or more redundancies are proposed, by putting themselves forward to stand as elected representatives under section 188A of the Trade Union and Labour Relations Consolidation Act 1992. Although they will not be acting as union reps in the consultation process, they will nevertheless be able to call, in practice, on the practical support, experience and resources of their unions. LRD also provides an advice line to members of affiliated union organisations.

In summary, this booklet sets out to provide guidance as to what employees can legitimately expect from their employer in any redundancy consultation exercise, however large or small. As well as providing details of the legislation, the booklet includes examples of “case law” — the decisions made by tribunals and courts that explain how the laws are to be interpreted. See Further information (final chapter) to find out how to obtain copies of the cases referred to.

Legislation in Northern Ireland

This booklet focuses on the legislation as it applies to England, Wales and Scotland. Northern Ireland has its own legislation, although the provisions are very similar.

The Northern Ireland equivalent to the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) is the Employment Rights (Northern Ireland) Order 1996.