Collective redundancy ― overview

By Tolley in association with Andy Williams at Charles Russell Speechlys LLP
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The following Employment Tax guidance note by Tolley in association with Andy Williams at Charles Russell Speechlys LLP provides comprehensive and up to date tax information covering:

  • Collective redundancy ― overview
  • Introduction
  • Extra requirements in a collective redundancy process
  • Failure to comply

Note: the case references in this guidance note are all subscription sensitive.

Introduction

Where an employer is proposing to dismiss as redundant 20 or more employees within a 90-day period, this may be classified as a collective redundancy.

In a collective redundancy situation, there are additional obligations on the employer in addition to the steps he should take in order to avoid having a dismissal by reason of redundancy treated as unfair (see the Individual redundancy guidance note for details of those steps). The additional obligations for employers making 20 or more employees redundant are set out in the Trade Union and Labour Relations (Consolidation) Act 1992, ss 188–198, and described below.

For the purpose of collective redundancy, every dismissal is treated as a redundancy except those that the employer can show are for one or more reasons related specifically to the individual concerned.

TULR(C)A 1992, s 195

The guidance that has been provided by the courts for best practice in relation to the statutory requirements around collective redundancies is not set in stone but, in practice, it is often taken as a starting point by Employment Tribunals considering a dispute. As with individual redundancies, the requirements for a fair procedure will vary with current employment practice, the size of the employer, the number of redundancies to be made and all the other circumstances of the case.

Williams v Compair Maxam [1982] IRLR 83

Where an employer is proposing to dismiss 20 or more employees as redundant within a 90-day period, statutory requirements for consultation apply. For information on the statutory consultation requirements and process, see the Information and consultation in collective redundancy guidance note.

There is also a useful booklet published by ACAS on How to manage collective redundancies .

Extra requirements in a collective redundancy process

As in individual

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