What does consultation mean when making redundancies in a small business?

A key part of a fair and lawful redundancy procedure is consultation. But what does this actually look like in the context of a small business?

Why do I need to consult?

One of the key parts of lawful dismissal of any kind is that you should look for alternative suggestions, try your best to avoid the dismissal, and give the employee at threat of dismissal the chance to ‘have their say’ about decisions being made. This also applies to redundancy.

 

What are the principles of consultation?

In the context of redundancy, consultation will be about exploring the reasons redundancy is being contemplated, discussing alternatives, explaining how people are being selected for redundancy (on what criteria).

Consultation should be meaningful, rather than a tick-box exercise, the principle being that you should not have made definite decisions until consultation has been completed, and employees should have the opportunity to influence decisions made. If you have already decided before it starts, consultation is not genuine and meaningful.

If suggestions are made or queries raised, these should be considered carefully and responded to – you haven’t got to agree to anything but must be able to demonstrate that you have considered it, and have given an explanation for the decisions made.

I already know for definite redundancies are essential – what’s the point?

If you are closing your business entirely you will already know you have to make everyone redundant. But even then, you should consult, as this gives employees the chance to ask questions about things like payments, notice entitlements, and to understand the context and reason for the decision.

In many cases you may think the proposed redundancies are essential, but they may not be, or not as many. If you are making redundancies because of the need to cut costs, for example, you may find through consultation that some employees are happy to take a pay cut, or take unpaid leave for a while, or reduce their hours, or they may have other ideas of how to save costs and reduce the need for redundancies.

You may also be able to avoid compulsory redundancies if people volunteer.

How long do I need to consult for?

Unless collective consultation applies (see below) there is no set period. Consultation needs to be meaningful and staff need to have a genuine opportunity to consider the proposals, come up with suggestions and queries, and for these to be genuinely and properly considered and responded to.

How long this takes will depend on the situation and on how many people involved. If you are making one single redundancy and the case for redundancy is very clear, consultation could be very short indeed. But if there are several people involved and lots of queries or suggestions made, and things need to be looked at and possibly changed, this will take longer.

What actually happens during consultation?

In most cases consultation will include some time for employees to consider the proposals, an individual consultation meeting at which you should allow the employee to be accompanied by a colleague or a trade union rep if they have one, and then time for you to consider your response, before making a final decision.

It is good practice to conduct consultation in a way that works for the employees involved, so for very few redundancies in a small business environment, that may involve more of an ‘open door’ scenario, where employees can come to their line manager with queries (in person or in writing) or suggestions as they arise, and discuss them.  As long as you can document that consultation has taken place and that any suggestions or concerns have been address, this is fine. The important point is that meaningful consultation has taken place, not necessarily that it takes place in a strict set format.

What is collective consultation?

In situations where an employer is making 20 or more redundancies in the same location within a 90 day period, collective consultation would apply. This means consultation must take place with employee representatives, and there are minimum required periods. For between 20 and 99 redundancies, consultation must last 30 days, for 100 or more redundancies, it must last 45 days.

 

If you are wondering how to consult fairly when conducting redundancies in your business, get in touch.