Acas Guidance on Handling Collective Redundancies

Acas has issued a new guide on how to handle collective redundancies, i.e. where an employer proposes to make 20 or more employees “redundant” from one establishment within a 90 day period.

"Redundancy" has a wider meaning in this context than for the purposes of statutory redundancy payments: it is a dismissal "not connected with the individual worker concerned", and includes where an employee’s terms and conditions are amended through termination and re-engagement.  (Employers should bear in mind, in the context of wrongful and unfair dismissal as well as collective consultation, that although they will sometimes not view a forced change in an employment contract as involving dismissal and re-engagement, this can be the legal effect of such a change.)

The guide, which includes case studies and a checklist for handling collective redundancies, is intended to offer clarity for employers, employee representatives and employees on the relevant statutory provisions, the impact of case law and what constitutes good practice.

The guide reflects the following changes in the law that took effect on 6 April:

  • The minimum period between the commencement of collective consultation and when a first dismissal may take effect has reduced from 90 days to 45 days when 100 or more redundancy dismissals are proposed within a 90 day period.  The minimum period when between 20 and 99 redundancies are proposed has remained at 30 days.

  • Employees on fixed-term contracts "which have reached their agreed termination point" are excluded from collective redundancy obligations.  Accordingly, the guide suggests that, when counting the number of proposed redundancies, the employer must include any fixed-term employees whose contracts the employer proposes to terminate early on grounds of redundancy, but not those whose contracts are to be allowed to expire on the agreed end date.

On the difficult issue of what constitutes an ‘establishment’ for the purposes of collective redundancies, the guide states that an ‘establishment’ means, depending on the circumstances, ‘the unit to which the workers made redundant are assigned to carry out their duties’. To help establish whether a workplace can be classed as an establishment, Acas suggests asking if a workplace is a distinct entity with:

  • a degree of permanence and stability 
  • the ability to carry out the tasks it has been assigned, and 
  • a workforce, technical means and organisational structure that allow it to carry out its function. 

Where employees work at different geographical sites, Acas also recommends:

  • checking what individual contracts of employment say, in terms of any geographical location the employee is assigned to and any relevant management structure, and 
  • being clear about what actually happens in practice. 

Acas also comments that the law relating to collective redundancy is complex, and that employers may wish to obtain legal advice. 

Lanyon Bowdler are experienced in this area and used to providing clear documentation for employers to refer to and issue to employees to ensure that collective redundancy exercises are applied smoothly and effectively, in compliance with the law and good practice.