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Consult to Avoid Huge Redundancy Penalties- 28/05/2008
Employers in the West Midlands struggling in the face of economic slowdown are being warned to follow procedures correctly when making redundancies – or face huge costs.
Tracy Worthington, employment partner at law firm FBC Manby Bowdler LLP, said: “With the current economic situation as it is, the issue of redundancy is likely to rear its ugly head for an increasing number of employers this coming year.”
If an employer is proposing to make 20 or more employees redundant at one establishment within 90 days of one another, the collective consultation provisions of Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 come into play.
“This means that the employer must consult with representatives of the affected employees for at least 30 days prior to redundancies being made. If the employer is proposing to dismiss 100 or more employees this obligatory consultation period goes up to at least 90 days,” Worthington continued.
“If the employer does not consult employee representatives for the appropriate amount of time this can lead to a protective award against the employer of 90 days’ pay for each affected employee.”
With a large scale redundancy, the penalty could run to millions of pounds.
Even if the collective consultation provisions do not apply, employers still need to consult with the workforce appropriately prior to making any redundancies to avoid unfair dismissal claims.
Worthington concluded: “To avoid getting trapped in the pitfalls of redundancies, I would advise employers that think redundancies are on their horizon to seek legal advice.”