Employment Law Case Update: Redundancy Procedure

One of the many unfortunate side effects of the Covid-19 pandemic has been the impact on our economy and the rise in redundancies.  When making redundancies in your business, it is crucial that the right procedure is followed, whether that is for collective or individual redundancies, in order to avoid a tribunal claim.  Our Employment Law team today review the case of Mr Vincent Whalley v The Bliss Space (Southport) Limited 2020 which highlights this point of always following a proper redundancy procedure, even during a pandemic.

Employees at the Southport Theatre and Convention Centre were placed on furlough in March 2020 when the theatre was closed during the first national lockdown. The staff expected this would be temporary and that they would return to work when the theatre reopened. However, in May 2020 the management company, Bliss Space, announced via social media that the theatre would not reopen and that the company was in liquidation. It was clear from the post that the company had been in discussion with the local authority for several months before announcing the closure, yet the employees had not received any prior warning or consultation before the announcement. The employees were subsequently contacted by liquidators with details about how to claim their redundancy and notice pay.

The former employees launched a claim in the Employment Tribunal (ET) against Bliss Space for failing to consult with them about the proposed redundancies.

The ET found the employees’ claim well founded. It ruled that the company had failed in its duty to consult with the employees under the Trade Union and Labour Relations (Consolidation) Act 1992. Bliss Space was ordered to pay a protective award of 90 days remuneration to each of the twenty-three employees who brought the claim. 

It is an unfortunate consequence of the pandemic that many businesses, especially those in the entertainment industry, may find themselves forced to close their doors for good and make their workforce redundant. However, it is important for employers to remember that they must still comply with their consultation responsibilities under employment law.

Any employer proposing to make twenty or more people redundant within 90 days must collectively consult with their employees, either through a recognised trade union or through elected employee representatives. Where 100 or more redundancies are proposed, consultation must begin at least 45 days before the first dismissal takes effect, and where the employer is proposing to dismiss between 20 and 99 employees in a 90-day period, consultation must begin at least 30 days before the first dismissal takes effect.  Different consultation rules apply where the employer proposes to make less than twenty people redundant.

In some cases, employers may be able to rely on a “special circumstances” defence, where it is not “reasonably practicable” to fully comply with their collective consultation obligations. However, this defence is interpreted narrowly, and won’t necessarily remove all employer obligations regarding collective consultation. In this case, the defence may not have been available because it was clear that Bliss Space had time to consult with the employees while it was in discussion with the local authority. Employers should therefore make every effort to meet their collective consultation obligations, and not assume they can rely on the ‘special circumstances’ defence, even in the midst of a pandemic.

If you are an employer in the difficult situation of having to make redundancies, you may find the following articles useful:

• How do I carry out individual or collective redundancies?
• How do I select the pool for redundancy?
• How do we decide who to put at risk of redundancy?
• Can I re-employ someone I made redundant?
• Can I make a woman on maternity leave redundant?