Martin Pratt Partner, Head of Employment & Immigration
Redundancy and Covid-19: Dealing with consultation in lockdown
It’s sadly inevitable that as the Coronavirus Job Retention Scheme begins to wind down, and employers across the UK emerge to a shrunken economy, but with pre-coronavirus wage bills, that redundancies on a significant scale are going to happen across the nation. UK law expressly requires employers proposing to dismiss 20 or more people in 90 days or less to consult with representatives of affected employees. Even where smaller scale redundancies are proposed, the general principles of unfair dismissal law also require consultation 1-on-1 with potentially redundant employees. Consultation generally involves talking. How can that be done with the current restrictions?
Predictably, the prospect of redundancy consultation via Zoom beckons. There are some unhappy precedents for this. Back in 2015, in the matter of USDAW and others v WW Realisation 1 Limited (the case arising from the collapse of Woolworths and Ethel Austin), collective consultation was conducted by a company administrator via a recognised trade union and a number of employee representatives who all dialled in remotely to a conference call that, it appears, was more than a little disorderly (sound familiar?).
Although the general approach taken in this case was found to be in breach of collective consultation obligations, the mere fact of the call (however chaotic) was sufficient to reduce the protective award from 90 days' pay to 60 days’ pay per employee. Clearly, though, employers facing such an exercise now will want to do far better than that, and avoid any sort of liability at all. Below are some answers to commonly asked questions allowing you to do just that.
Can you run a lawful collective redundancy consultation exercise on lockdown?
Yes. Despite what happened in the USDAW case (above) there is no reason at all why employers cannot consult with employees who are either in lockdown or working remotely. Nothing in the collective consultation rules, nor in any guidance on individual consultation, requires face-to-face meetings between employees or their representatives and the employer. So Zoom, Microsoft Teams, Skype etc. can be utilised if necessary.
Beware, however, issues surrounding confidentiality and “Zoombombing”. At the beginning of May 2020, an FT journalist was able to listen in on sensitive Zoom meetings held by senior managers of the Independent and Evening Standard regarding potential salary cuts and furloughs. He was suspended by the FT and subsequently resigned - but not before tweeting about the highly confidential meetings he accessed.
How do we enable the remote election of Employee Representatives?
If an employer doesn’t have a recognised trade union in place, and neither does it have a standing employee consultative committee for the purpose, then it will have to facilitate the election of employee representatives to consult with regarding any proposed redundancies. This is tricky to round out remotely - but possible with some pre-planning.
There will be no need for an election unless the number of nominations exceeds the number of nominations required but, if there is, then employees dropping voting slips into a ballot box (in more normal times this is often a hastily improvised cardboard box left in a meeting room) isn’t going to be practical. Even if employees are physically at the workplace, to avoid Covid-19 transmission it may be necessary to disinfect the ballot papers, or leave them 72 hours, before counting. Hardly ideal.
A ballot can be held online but it has to be remembered that it must be secret. Simply asking people to click a voting button on an email will not, without further measures, give enough anonymity to the voter and their choice of rep. If employers are able, they should set up a technical solution where electronic votes are anonymised. Alternatively a third party, notably the Electoral Reform Society, could be appointed to run the election. If those options are out of the question, a trusted individual within the employer, probably in the HR Team, could be appointed to be the recipient of the votes, so long as all parties are happy with the choice. Such a person may even agree to offer a confidentiality undertaking to all nominees.
Can furloughed staff take part in a collective consultation exercise?
The context to this question is that employees who are on the Coronavirus Job Retention Scheme (CJRS) cannot carry out any work or provide services for their employer. But the Employer Guidance to the CJRS makes it clear that union representatives can carry out their duties without rendering themselves ineligible for the CJRS, and ACAS guidance has said that staff can participate in their own disciplinary and grievance hearings without having to be brought back from furlough first.
So it is almost certain that furloughed employees will be able to participate in redundancy consultation, whether as employee representatives, or as part of their own individual consultation. If this were not the case, employees on furlough would have their legal right to be consulted before they are dismissed removed. Given that the Government has made it clear that the CJRS does not disapply otherwise applicable employment law, this seems incredibly unlikely.
Can we limit the number of participants on a videoconference collective consultation?
In a collective redundancy consultation, employers are simply obliged to ensure that there are sufficient representatives to represent the interests of the affected employees. No precise employee to representative ratio is given in the relevant law.
So, inside those constraints, an employer has a lot of flexibility regarding the number of elected representatives the employees can pick. Such an employer may favour a slightly smaller number of employee representatives than it otherwise would to facilitate videoconferences or conference calls.
As detailed above, the USDAW v WW Realisation 1 case, and also likely your own experience of recent months, shows that the more people attending, the more challenging it is it to make conference or video calls work. So employers should think carefully about the realities of their own workforce. For example, if previously you would have had two representatives per team, think about reducing that to one. Remember, though, that all employers need to ensure that the employee representatives have “access” to their constituents. That means ensuring there are not so many employees per representative to make such access meaningless or impractical, and that there are arrangements in place (again, by videoconference or otherwise) to allow staff to speak to their reps.
Is Covid-19 a “Special Circumstance” meaning we don’t have to consult?
Special circumstances, under the relevant law, remove the need for collective consultation. It is very unlikely, though, that the current emergency alone will constitute a special circumstance allowing you to dispense with collective consultation altogether. Neither will it obviate the need for individual consultation to avoid an unfair dismissal claim.
Employment Tribunals have always interpreted what constitute "special circumstances" very narrowly. On that basis there would probably need to be another factor in addition to the current pandemic before it will amount to "special circumstances". For example, such a factor could be an employer to collapsing into liquidation as a result of custom completely drying up due to Covid-19 restrictions. That may be a “special circumstance” – but in that case the immediate cause of the redundancies would be the collapse in custom rather than the pandemic on its own. Such situations already fall within the case law on “special circumstances”. In any event, whatever happens, all employers still have to do whatever they can to comply with the collective redundancy law, even where “special circumstances” do exist.
It is also worth noting that Acas have expressly said that in effecting redundancies during the coronavirus outbreak employers “…must still consult [their] employees. It's likely that [they’ll] need to do this remotely…” This means that if an employer fails to consult 1-on-1 with provisionally selected employees it is very likely an unfair dismissal finding will result from any Employment Tribunal challenge.
Does the announcement that the CJRS is winding down mean we have to start collective redundancy consultation immediately?
UK law says that employers must begin consultation when they proposing collective redundancies – although the underlying EU law uses the word “contemplating” and a number of cases have considered whether there is any distinction. As a result of these decisions, it has been found that where a workplace closure is proposed, an employer should start consultation when it is recognised that dismissals will likely result from the closure.
Similarly, it is probable that your accounts and finance teams are already looking at the projected costs of the forthcoming downturn, and it may be becoming clear that the figures don’t add up. As a result you may be looking at cuts that would translate into 20 or more redundancies. Does that mean you have to start consulting immediately?
In practice, likely not. Provided an employer avoids generating the impression that it has decided on redundancies already, and any hold-up in starting consultation is simply down to finalising proposals that it will discuss with employee representatives, then the employer will be at little risk from a short delay. Indeed there are dangers in starting collective consultation too soon. Conflict, and possibly litigation, could arise where an employer’s proposals are not properly thought through resulting in frustrating, acrimonious and counter-productive consultation with staff representatives.
As with many things the current situation will make redundancy consultation even more difficult than it is without a pandemic. Planning is therefore vital. Matters such as how employees are notified after consultation that they are being made redundant need to be considered - some employment contracts expressly prohibit service of notice by email, are suitable arrangements in place for postal service?
These are challenging times in just about every aspect of life, and redundancies are tremendously difficult at the best of times, but with planning and foresight this is a challenge that employers can safely overcome.