This webinar is designed to help you identify the key issues and risks which may arise when a restructuring process is required, either before or after a TUPE transfer, and which will often involve a connected collective redundancy consultation process.
The webinar provides an overview of how to effectively manage the overall process and avoid the pitfalls (and significant liabilities) that can arise.
The webinar is relevant for those dealing with a business sale or outsourcing situation, and on either the operational or legal side.
We will look at:
- Common types of restructuring and timing considerations
- Collective redundancy consultation: When; Who; How?
- Differences from TUPE information and consultation obligations
- Common pitfalls and problems
- Protection against unfair dismissal claims
- Risk mitigation
Our speakers, Hannah Swindle and Karin Kiho discuss the practical issues, how to deal with them and how to protect your organisation from liabilities.
ThinkHouse TUPE Club - Managing a restructure and redundancy process in a TUPE transfer
Transcript
Siobhan Bishop: Welcome to our TUPE Club webinar and thank you all for joining; it's great to see so many people have joined us today.
I'm Siobhan Bishop, a principal associate in the Employment, Labour & Equalities team here at Gowling WLG. The topic we're covering today is Managing a restructure & redundancy process in the context of a TUPE transfer.
So, it's worth mentioning that this TUPE and Restructuring webinar is one we've put together in response to your feedback from our last webinar, with it being one of the topics you've asked us to cover. So, we hope it's going to be a really useful one for you, whether you're on the legal, operation or human resources side of a deal. And it's relevant for either a business sale or outsourcing situation and the speakers will mention the issues as they go through the topics.
So, I'll start by introducing the speakers, and, as you can see, our speakers today are:
Hannah Swindle, who is a Director in the Team; and Karin Kiho
who is a Senior Associate and between them they will identify the
key issues and risks when there's a restructuring process,
either before or after a TUPE transfer, and which will often
involve a connected collective redundancy consultation
process.
As you know, we invited you to submit questions before the webinar
and we've included the main themes in the session today. But
don't worry, there's still time to raise a question today
as well.
So, on Q&As, there is Q&A tab and if you can use that for questions, that would be fantastic, and please feed those in as they occur to you and we'll try and pick up those at the end. We're also joined by Suzie Barnes who's here to help with any technical issues that may arise - so if you have any technical questions, please contact her through the "chat" button on the webinar.
The webinar will be:
- an overview of when and how to effectively manage the collective consultation process for redundancies;
- how it differs from the TUPE information & consultation process; and
- how to mitigate the risks (and significant liabilities) that can arise
And at the end, we'll have the chance to look at your questions.
Right, so I'll start now and hand over to Hannah Swindle who is going to start by way of introduction and setting the context for today's webinar.
Hannah Swindle: Good morning everyone. As introduced by Siobhan, this session is about restructuring – and as this is TUPE Club – we are looking at restructuring in the context of a TUPE transfer and situations where the two elements are linked in some way.
We're going to pick up on a few example situations, looking at some of the things we need to be aware of when planning for these changes, and also some pointers as to how the connected processes overlap and interact.
To start off, as a very quick reminder, my first slide sets out the situations where a TUPE transfer can apply. That could be a "business transfer" style TUPE transfer– which is defined as a transfer of an undertaking or economic entity which retains its identity. Here, all or part of an undertaking or business is transferred to a buyer, the transferee;
the other type of transfer is; A "service provision change" – this is where activities carried out by/on behalf of the client are carried out by a different party going forward. So this could be where services are being outsourced for the first time or it could also be any subsequent outsourcing to a replacement supplier, or where the services or activities are being brought back inhouse by the client, known as an insourcing.
I won't look at the conditions for a transfer in any more detail today – if you'd like to learn more, I'd encourage you to have a look at our introduction to TUPE webinar which is available on our website. For the purposes of today, we'll assume that all conditions for a TUPE transfer are met in the scenarios we are looking at.
So – as I mentioned- we're talking today about TUPE transfers connected with a restructuring or movement of staff within a group. What sorts of circumstances are we talking about?
Restructuring is a general term which covers situations where staff are organised differently, but it can often involve a redundancy situation or down sizing. For example
After a TUPE transfer takes place, an incoming employer may want to make redundancies. This may be because the new employer needs to relocate a business or services to their own offices or site at a different location, or they may already have a sufficient number of their own employees to carry out the jobs that are going to transfer.
Alternatively, it may be appropriate to carry out a reduction in the workforce before a TUPE transfer in certain circumstances. This may be more common in a first generation outsourcing or asset sale where the client or customer wants to look after its own staff and effect a redundancy process itself, with managers who know the employees being involved.
This leads me onto an important point - when making any dismissals these will need to be done fairly to minimise risk - taking into account both ordinary unfair dismissal protections but also the additional protections provided to employees by TUPE.
Also -if redundancy proposals involve 20 or more dismissals then collective redundancy obligations will apply and Karin is going to recap the main elements of a collective process for us in a moment.
A collective redundancy process might also apply if there is a proposal to change terms and conditions for 20 or more employees which involves dismissal and reengagement– also known as 'fire and rehire'.
The protections given to employees by TUPE means it is harder to change terms and conditions where those changes are connected with a transfer so this process can potentially be used by employers to try to ensure any changes made are valid and enforceable. This process has featured unfavourably in the press in recent years and as a result I think it is fair to say that employers are more reluctant to carry it out, but I wanted to mention it here to highlight that a dismissal and reengagement will qualify as 'redundancy' for collective purposes even though there is no planned reduction in the overall number of employees. We're not going to focus on this topic in any detail today, but again further information is available in one of our previous webinars.
I've mentioned a share purchase in my list of examples. Of course, TUPE doesn't apply to a share sale or purchase, but sometimes there can be a less obvious connected TUPE transfer that the parties might not immediately consider. Either before or after a share acquisition, there could be a TUPE transfer triggered by an intra-group hive up or hive down – where employees need to be moved into the right place within a group of companies. This could be so that the group gets ready for the sale of one of its companies, moving employees into or out of the target, or after completion of a share purchase, a buyer may want to integrate the employees into another group company. Where a TUPE transfer is triggered, this means that all of the rights and obligations associated with it will apply.
This includes obligations on both the incoming and outgoing employer to inform and consult and Karin will now run through a reminder of the main points.
Karin Kiho: As Hannah mentioned, we covered the obligations to inform and consult under TUPE in the last webinar. This is available on-demand on our website, so I'm not going to go through all of that in detail. But I will just recap the main points.
Where there is a TUPE transfer – both the outgoing and incoming employers will have duties to inform and potentially to consult with appropriate representatives of their affected employees.
WHAT IS THE DUTY?
The duty to inform is the requirement to provide certain specified information to the appropriate representatives about the transfer, timing and its effects on the affected employees.
The duty to consult kicks in where there are any "measures" or consequences that the employer envisages the transfer may have on the affected employees. Even where no "measures" being proposed, case law suggests that employers should look to consult in any event on a voluntary basis to help the process run more smoothly and potentially avoid employee relations issues.
It is always important to consider whether a planned restructure or a step taken in connection with it is a measure on which you may need to consult. This will often depend on the timing of when the proposal may take effect and how certain the relevant party is that the step will happen.
It is also important to consider how much detail to give to employees about a particular step you propose to take in connection with the restructure. There is a balance that needs to be struck.
For example, you may anticipate that there will be a share acquisition post-transfer in respect of which you could be under a duty to consult. However, you may not want to or be able to disclose much to the employees for confidentiality reasons, so there is a need to consider if the risk of not complying with the duty to consult outweighs the risk of breaching the confidentiality provisions of a potential share sale.
From a practical perspective, it's also worth flagging that if a share acquisition happens shortly after the transfer then, for practical reasons, the employer may also want to consult on the Buyer's proposed measures post-acquisition, e.g. to any existing incentive schemes. This is not a legal requirement but may just help things run more smoothly.
Equally, there is a risk in taking the opposite approach and "oversharing" about steps you may take in the future. This is because you may not be able to provide enough detail about what you're proposing and when – which could end up destabilising the workforce and creating more employee relations issues.
DUTY TO CONSULT WITH WHOM?
The duty to inform and consult is with the "appropriate representatives". By that, we mean either pre-existing trade union or staff council representatives or those that have been specially elected for this process.
RELAXATION OF RULES
But of course, there are some exceptions. For example:
- micro-businesses with less than 10 employees can consult directly with employees; and
- For transfers taking place on or after 1 July 2024, the requirement to elect employee representatives for the purpose of TUPE consultation will be removed where either:
- The employer has less than 50 employees; or
- Regardless of the employer's size, there are less than 10 employees involved in a transfer.
In all of those scenarios, employers will be able to inform and, if necessary, consult directly with employees, provided there are no existing employee representatives in place and the employer has not invited any of the affected employees to elect employee representatives
Couple of flags though:
1) this will not apply to collective redundancy consultations, so
if the measure is redundancy for 20 or more employees, consulting
directly with employees would still not comply with the duty to
collectively consult which I will cover off shortly; and
2) There may be circumstances in which consulting via elected reps may be preferable to individual consultations – e.g. where you have 49 employees with whom you need to consult
TIMING
In terms of timing, how far in advance of the transfer do you need to start the TUPE consultation will depend on the significance of the proposed measures. So for example, a restructuring or redundancy process would require more time than a simple change to the uniform.
RISKS
Just a reminder that the penalty for failure to inform and consult is up to 13 weeks' gross pay per affected employee.
That is a joint and several liability that is shared between the incoming and outgoing employers, unless the sale contract apportions liability differently.
SPECIAL CIRCUMSTANCES DEFENCE
It is possible for an employer to defend a claim for failure to inform or consult where it is able to show there were special circumstances which meant it was not reasonably practicable to comply with the duty to inform and consult. This is a very narrow defence though, so not one we would suggest counting on.
In addition to the TUPE information and consultation point, in any restructuring or redundancy process, you also need to check whether it triggers the collective redundancy consultation requirements.
TRIGGER
The requirement to consult collectively is additional to any other employer obligations. They are triggered when an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a 90-day period.
"Proposing to dismiss" means that there is more than a mere contemplation of the possibility of redundancies but it is before an actual decision is made by the employer to make redundancies. The meaning of "redundancy" is broad for the purposes of collective consultation, so, for example, it could be triggered by a proposal to fire and re-hire 20 or more employees to implement a change in contractual terms.
OBLIGATIONS
If the duty to collectively consult is triggered, the employer is under an obligation to:
- Provide certain information to employee representatives;
- Consult with them about the redundancy proposals.
I will briefly explain what each of those obligations involves.
Duty to provide information
So, firstly, the obligation to provide information is similar to the requirement of the duty to inform under TUPE. There is a list of specified written information which must be given to the appropriate representatives. It includes things like reasons for the proposals, numbers and descriptions of redundancies and calculation of redundancy payments.
The key point is that the information must be detailed enough to make sense and to enable meaningful discussions to take place.
Employee representatives should be given a copy of the HR1 form which the employer needs to file with the Secretary of State for Business and Trade.
Consultation
As for the subject-matter of the consultation, the collective consultation process has to include certain points like:
Avoiding dismissals - so this could look at possible other ideas such as reduced hours or different roles or a different approach to running the business or services.
Reducing the number of dismissals – even if some dismissals cannot be avoided, it may be possible to reduce the number of compulsory dismissals, e.g. by considering voluntary redundancies.
Mitigating the consequences of dismissals – so this might also include voluntary redundancies, but also things like help with finding employment, outplacement advice, an enhanced redundancy payment and so on.
Consultation must be with a view to reaching agreement. So, although, the employer must be open to ideas provided by the reps and genuinely consider them, ultimately the redundancies can go ahead, so the reps can't "veto" the redundancy proposals. But the employer does need to have an open mind and be willing to be persuaded, as the ultimate aim / purpose of the consultation process is to achieve an agreed solution with appropriate representatives.
TIMING
In terms of timings, there is no fixed period as such for how long the consultation must take place – the key is that the consultation must begin in "good time". However, dismissals may not take effect before the expiry of a minimum period of 30 days. That is increased to 45 days if 100 or more employees are affected.
The minimum time periods serve in effect as a moratorium on dismissals for the minimum period whilst consultation is carried out. Employers can give notice of termination during this period, as long as the expiry of the notice occurs outside the period – although query how that works with keeping an open mind
RISKS
The penalty for failure to collectively consult is separate to any penalty for failure to inform and consult under TUPE. So, this is an additional maximum penalty of up to 90 days' gross pay per employee (and there is no cap on weekly pay)
Of course, worth also flagging that if an employee is dismissed, there may be additional employment obligations, such as individual consultation and looking for suitable alternative employments. Again, the protective award is in addition to any award that may be made for unfair dismissal. Of course, to claim unfair dismissal, the employee must have 2 years' service, but there is no service requirement for protective award penalty.
SPECIAL CIRCUMSTANCES DEFENCE
In a very similar way to the failure to inform and consult under TUPE, there is a potential defence to a protective award – known as the "Special circumstances" defence. But, be warned the circumstances must be extremely special and even then, the employer must take all steps as are reasonably practicable in the circumstances. So, it's really important for the employer to do whatever they can to comply, even when facing extreme timescales. For example, even in an insolvency situation, this, by itself, will not be a "special circumstance" and the employer must do whatever it can to limit any potential penalty.
FIRE AND REHIRE CODE
Before I hand back to Hannah for the next slide, I thought I would flag that a statutory Fire and Rehire Code is expected to come into force next month which increases protection for employees where the employer is proposing to vary their terms and conditions. The government also proposed that a failure to comply with the Code should increase a protective award by up to 25%, but this proposal currently remains in draft form. It is worth flagging that if a new government is elected following the general election, this may be all subject to change so watch this space.
Hannah: Businesses will need to consider the right time to carry out any planned restructuring process– and whether it's better to carry this out before or after a TUPE transfer.
Sometimes there won't be any real choice about when a process or reorganisation has to happen, as other considerations such as tax, or competition requirements will drive both the reason for staff restructuring and also the timeline.
At other times, there may well be a choice. What are some of the factors that may influence a decision?
If a redundancy process is needed – should this be carried out before or after a TUPE transfer? there are a number of things to think about.
whose redundancy reason is it? – caselaw has confirmed that an outgoing employer cannot 'borrow' or rely on the incoming employer's ETO or redundancy reason to justify the dismissal. If any dismissal is made before a transfer without an ETO or economic technical or organisational reason, it will be automatically unfair for employees with 2 years' service and connected liabilities will transfer across to the incoming employer in the ordinary course. I'll look at potential ways to manage risks in a bit.
In an asset sale or first generation outsourcing, , does the outgoing employer want to manage a redundancy process itself for employee relations reasons? Maybe all staff are long serving, or its worried about a reputational backlash if it doesn't manage the process - or it may be because the process also involves staff retained.
If a buyer or incoming employer needs to carry out a proposed redundancy process because it operates from a different location than the seller or outgoing employer, then there are often practical difficulties involved in carrying out a redundancy process post transfer. The incoming employer may not have a physical location where it can consult with staff – and there are also cost considerations. If the business is being relocated a significant distance away, for example, it is likely that most staff will end up being made redundant. Here, a buyer might not want to carry the additional cost of a protracted consultation period post acquisition and so may want to start consultation pre transfer to save time and cost.
Alternatively an incoming employer may need to take time post transfer to fully analyse the new business it has acquired before deciding how many employees in what roles it will need going forward to run it most effectively and efficiently. It may also need to make other changes such as to pension schemes which has its own minimum consultation period requirement, or other terms and conditions. All may require a more involved process that an employer will need to think about before launching in.
If the incoming employer needs to pool transferring employees with its existing work force for a fair dismissal, this might only really be practical after the transfer
The impact of other previous processes should also be factored in. Staff mighty have already gone through various consultation processes and could be feeling vulnerable and insecure which can affect productivity and retention. So an employer needs to think about when it would be the least disruptive to start to consult about another process. It may be possible to wait a while before having to start something new, finally.
If there is to be a hive down pre sale or hive up post sale, then there may be some flexibility in the timing of the TUPE transfer, with the employer being able to separate the transfer and the share sale with a longer period in between. At other times, other factors may mean the two may need to happen closer together. This could have an impact on TUPE consultation risk as Karin has mentioned – for example if the parties want to keep a potential post hive down sale confidential so don't want to include it as a measure.
So – its fair to say there's lots to think about and every case will be different depending on its circumstances.
Karin: Hannah has flagged that there are certain situations where it would be useful for an incoming employer to be able to start redundancy consultation before the TUPE transfer.
Well, historically – an incoming employer could not start collective consultation until after the transfer without risking claims for protective awards. This is because the incoming employer will not have been the "legal" employer of the relevant employees until after the transfer.
However, under the TUPE rules, "redundancies" would be deemed a measure. So the employees would be left in a position where they are aware of potential redundancies, but have limited information about it, which could be a huge source of stress and uncertainty. It also meant that the incoming employer had to delay any dismissals until after the transfer, which added time delay and increased costs.
Changes were introduced in July 2014 to allow incoming employers to choose to validly start collective redundancy consultation pre-transfer. The changes effectively created a legal fiction because of course, the incoming employer doesn't actually employ the transferring employees until the transfer, but, for the purposes of satisfying the duty to collectively consult, the incoming employer is treated as if they are the employer at the time of the pre-transfer consultation.
In practice, it means the overall period of consultation with employees can be much shorter and potentially less costly. It also reduces the length of time employees have to live with uncertainty, which can help with employee relations.
Pre-transfer collective consultation can only be used in circumstances where:
There is, or is likely to be, a relevant TUPE transfer;
The incoming employer's proposes to dismiss as redundant 20+ employees at one establishment within 90 days;
At least one transferring employee must be affected by that process.
Where those conditions are satisfied, the incoming employer has the option to carry out pre-transfer collective consultation.
So what does the process look like to set up pre-transfer consultation? As you might expect – not straightforward!
It's the incoming employer's process, and they can choose whether or not to do it by way of a written election. But it is really important to flag that the process can't be forced on the outgoing employer because the outgoing employer has to consent to it. It's obviously best to get the outgoing employer's consent in writing so there's no later dispute about whether it was given.
The incoming employer is reliant on the outgoing employer to facilitate the process, including by allowing access to the employees and helping to elect any employee reps. The incoming employer must also remember to complete the HR1 form and notify the Secretary of State of the proposed dismissals.
Either the incoming employer or outgoing employer can give the required information to the representatives, but it's the outgoing employer who's going to be likely to hold relevant information such as notice periods and enhanced redundancy entitlements in the first place.
Care also needs to be taken to ensure there are appropriate representatives in place for the transferring employees – the incoming employer may be reliant on the outgoing employer's knowledge of the workforce for information about how many reps will be required from each area of the workforce to ensure all employees are adequately represented.
It's essential to have co-operation between the parties to make sure the process happens as smoothly as possible – which will be key to determining whether it will work in practice. There's no legal obligation on the outgoing employer to provide information or assistance – and lack of cooperation would not be considered a special circumstance which would provide a defence to a failure to consult claim for the incoming employer.
So to make sure that this takes place, it is a good idea for the parties to enter into a cooperation agreement. This will include the parties agreeing where potential liabilities would sit if things go wrong, for example – if the outgoing employer doesn't allow time off or access to facilities for the reps. The parties may also want to include protections for their confidential information, to agree how the process itself will be run, the facilities that will be provided and what access will be given to employees. The parties should also allocate any consultation process costs.
The outgoing employer can also face risks connected with this process, because the incoming employer can choose to cancel the process at any time. This can cause disruption and potential employee relations issues as any consultation done so far won't count, and employees will be left until after the transfer before they know what will happen – if it's cancelled, the process can't be restarted until after the transfer.
And, of course, it is important not to forget about the need to consult individually before any redundancy dismissal. Where employees have 2 years' service, an employer will risk claims for unfair dismissal if it is not carried out. As the incoming employer doesn't legally employ the employees until the transfer, despite this legal fiction for collective consultation purposes only -any individual consultation it carries out before the transfer is not technically going to count towards consultation for unfair dismissal purposes. Also, pre-transfer consultation does not explicitly allow the incoming employer to select individuals for redundancy before the transfer and ACAS has previously advised that employers shouldn't do this.
HANNAH: Following on from Karin's points, that I wanted to flag a few more practical issues that can arise when using pre transfer consultation and some ways of managing that risk.
As we have heard, any proposed post transfer redundancies will be measures that need to be fed into the TUPE consultation process to avoid the risk of consultation claims. Using the pre transfer consultation process enables the employer to be able to provide more information about the proposed redundancies at an earlier stage, helping to reduce uncertainty. It's important to manage the flow of information under the two consultation processes which are likely to be run side by side, so there are no inconsistencies. The employers will need to map out how to run two similar but different processes, ensuring the requirements for both are fully complied with. It may be appropriate to use the same reps – but they will need to have a remit to consult for both processes if that's the case.
Pre transfer dismissal: Karin has reminded us that the requirements to carry out a full individual consultation process before making redundancy dismissals can cause risk for the employer of unfair dismissal claims if this is carried out pre transfer, as they cannot rely on it. A pre transfer process also results in issues around pooling – should this be with the incoming employer's workforce and selection?
However, if dismissals are carried out by the outgoing employer pre transfer this also won't remove the risks if they do not have an ETO reason – which belongs to the incoming employer, any dismissal without an ETO reason can result in an automatically unfair dismissal. Associated liabilities would legally sit with the incoming employer
So – pre transfer dismissals are risky- but sometimes they can't be avoided. To remove the risk of claims of automatic or ordinary unfair dismissal, the redundancies should be made under a settlement agreement where the employee waives their right to bring a claim. This will need to be tripartite, so that the incoming and outgoing employer can both take the benefit of the waiver.
As a reminder, it is not possible for an employee to legally waive their rights under a settlement agreement to bring either a collective consultation claim or information and consultation claim. It can be validly done through ACAS – but this potentially introduces more complexity into the situation which may not be practical or appropriate.
As a practical point, to avoid any confusion or duplication, the parties should agree in the cooperation agreement when and who will give notice of dismissal at the outset .
Another problem might arise if the collective redundancy process has not concluded by the transfer date. There could be a scenario where representatives do not transfer, so– who will you consult with now? – does the incoming employer have to re-elect reps and start again? What happens if the outgoing employer was happy to negotiate with a trade union but the incoming employer doesn't want to engage with them post transfer? – again – the incoming employer needs to work out how it can effectively conclude consultation in these circumstances.
So, in summary, the process is complicated, and will need careful thought about how it will be managed so that it can be conducted in a meaningful way and ensure that the requirements of both consultation processes can be met.
It is always important to start the planning process early, so that you can determine the best way to carry out the restructuring, identifying any potential risks or obstacles, factor in minimum periods for consultation and considering how to plan round them.
The more time you spend at the outset before the start of the process working out a timeline, planning communications and working out the necessary steps, hopefully the smoother the process should be, although of course there are always unexpected issues that arise. THINK
It may be possible to cover off some of the risks and apportion liabilities using warranties and indemnities. In this way, the parties can agree what responsibilities or actions they agree to undertake and by using contractual indemnities, underwrite liabilities or potential claims that could arise or be caused should either party fail to carry them out properly.
If the restructuring is being made at the request of the other party – eg if the rightsizing of a service is being carried out by a supplier at the customer's request, then it may be appropriate for the customer to provide indemnity protections and cover for redundancy costs or claims arising from the redundancy dismissals protection mitigate costs . Should these protections be limited to transferring employees, or should they be extended to include any other members of the workforce? for example for reasons of fairness, a buyer perhaps should select from an extended pool including its existing employees.
Who should be taking the risk of the process? if a particular course of action is being taken at another party's request, which increases risk, for example where a buyer requires the seller to make pre transfer dismissals, it may be reasonable that the buyer takes responsibility for the costs of any consultation or dismissal claims that could then arise.
In a similar way, if TUPE consultation is not being carried out fully - for example, if there is no consultation about a subsequent share sale as the seller wants to make sure this information does not destabilise the workforce, or if it has to remain confidential for market reason, then the buyer may want to ask for indemnity protection to cover any subsequent claim that could result.
If the pre transfer process is being used – as we've discussed, a cooperation agreement can be negotiated, which sets out clearly each party's obligations and providing protection for the other party should the other fail to comply with its obligations.
It is also usually sensible to work out a communication plan at the outset to make sure that the messaging for the restructure, and how it will be delivered is consistent between the parties, so no one goes off script. Often, getting the employees' buy in to a process will mean it goes more smoothly and successfully, and so communications are key.
Tied into this will be engagement with the unions. If there are recognised unions, they will need to be involved from an early stage of any process, as their support will usually help ensure a successful process and reduce the risk of claims. If you are concerned about confidentiality issues or leakage among the workforce before you are ready to share your plans, one option night be a contractual confidentiality agreement to be entered into with the relevant union representatives.
Siobahn: So that brings us to the end of our slides.
Audience question: How do you deal with voluntary redundancies in a collective redundancy consultation, especially if they want to leave early?
Karin: I think there are two parts to this question – (1) whether voluntary redundancies count towards the trigger for collective consultation and (2) how does a request to leave early work with the minimum time periods under collective consultation.
In answer to the first part - I think the main point with voluntary redundancies is that they may still count as a "dismissal" for the purposes of collective redundancy consultation. This obviously means that the obligation to collectively consult could still be triggered even where all redundancies might be on a voluntary basis.
But this depends on the actual proposals and what prompted the voluntary redundancy request. For example, if the employer proposes to make at least 25 redundancies and opens up the floor for voluntary redundancy requests prior to making any compulsory redundancies, then voluntary redundancies would very likely count towards the collective redundancy consultation trigger. However, where the employer is carrying out a more general costs saving exercise without any specific numbers in mind – just to see who might be interested and what savings the employer could achieve – then terminations made in response to that may not necessarily count towards the trigger for collective redundancy consultation. As it is not clear-cut, better to err on the side of caution and include it in your count for collective consultation trigger.
Of course, a key point is that it's up to the employer to decide whether or not to accept a request for voluntary redundancy from a specific individual. In some cases, the employer may be agnostic as to which employees leave and may even offer incentives to promote requests for voluntary redundancies. In other cases, the employer has clear ideas on who they want to keep and if they receive a request from one of those individuals for voluntary redundancy, they may not accept it. This should be made clear to employees when making the request for voluntary redundancies to manage the employees' expectations and avoid later dispute if the employer refuses any particular request.
In terms of the second part - if the employee wants to leave early, from a contractual perspective, the parties can agree to reduce the notice period for example. This would reduce ongoing salary costs for the employer. Historically, case law suggested that, potentially, volunteers could leave before the end of the statutory 30-day period without breaching the time limit for when dismissals can take effect. However, European case law suggests that still carries risk and could breach the moratorium, resulting in claims for a protective award.
To reduce risk, employers may want to seek agreement of the representatives to enable volunteers to leave before the end of the statutory moratorium. It won't eliminate the risk of claims altogether, but it may reduce the likelihood of a claim being brought. In practical terms, if an employee has asked to go early, for example because they have a new job to start, and if the representatives are onboard, they may be more unlikely to raise an issue.
Siobhan: I think we'll have to draw the questions to a close there, thanks once again and we hope you sound the session useful. There's a short questionnaire that pops up at the end of this webinar and we'd really appreciate if you would take some time to fill in that, we'd be very grateful.
So, just before we end, a quick reminder that we have all our TUPE Club webinars available on demand on our website and this webinar - and a transcript - will be available shortly. So that can be really useful if you want to review anything or send it to your colleague who've missed the session today.
Our next TUPE Club will be around November time, so watch out for the invitation to that and, in the meantime, if you have any TUPE questions, please do not hesitate to contact any of us today or your usual contact in the team here at Gowing WLG.
Thank you and we look forward to seeing you for the next TUPE Club.
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