Despite the Coronavirus Job Retention Scheme (furlough scheme) being introduced by the UK government in March to limit the impact of UK businesses, retail giants such as Marks & Spencer’s and Debenhams have recently given notice to their workforce of hundreds of job losses due to the impact of lockdown.

In the event an organisation is faced with a similar stark reality of making a significant number of employees redundant, the NI employer must be aware of its legal obligations before commencing such a process. Where an employer proposes to make large scale redundancies of 20 or more employees within a period of 90 days or less at a single establishment, it must consult on its proposal with representatives of the affected employees and inform the Department for the Economy of its intentions. This is known as collective consultation.

Affected employees are those affected by the proposed dismissals or by measures proposed to be taken in connection with the dismissals. Where any of the affected employees fall into a category in respect of which a trade union is recognised, the trade union must be consulted. In other cases, the employer may consult with representatives directly elected by the affected employees. When elected representatives are necessary, legal rules govern their election.

For the NI employer, consultation must begin in good time. Certain minimum time periods apply depending on the scale of the redundancies proposed. Where 100 or more redundancies are proposed, consultation must begin at least 90 days before the first dismissal takes effect. For fewer than 100 redundancies but more than 19, the minimum period which must elapse is 30 days. These time periods act as a moratorium, in effect, giving adequate time for the employer and affected employees, to meaningfully consult and discuss ways to prevent redundancies from occurring. Generally speaking, if a Tribunal did not believe that an employer meaningfully consulted with an employee or his representatives during the redundancy process, this may lead to a finding of unfair dismissal.  

The repercussions for an employer in breaching their legal obligations to collectively consult can be serious. Failure to comply with any of the rules on information or consultation, or on the election of representatives, can lead to a protective award being made by an Industrial Tribunal. The maximum protective award is up to 90 days’ gross pay for each dismissed employee. The statutory cap on a week’s pay does not apply. In such circumstances, the employer is likely to face a group legal action whereby any awards granted by the Tribunal could add up to a substantial figure.

If you require assistance, please contact the Employment Department on 028 9043 4015.

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Whilst the decision and reasons behind the closure of a business are ultimately a matter for the employer to determine; the employer must consult with any affected employees where it is proposing to make redundancies and follow a fair procedure when dismissing staff by reason of redundancy.

Where an employer is proposing to make redundant 20 or more employees at one establishment within a 90 day period, it must conduct meaningful consultation in good time with a recognised trade union or employee representatives with a view to reaching agreement in relation to ways to avoid redundancies, the reasons for redundancies, how to keep the number of dismissals to a minimum and how to limit the effects on those dismissed. This collective consultation obligation extends not only to those employees who are at risk of redundancy but also to those whose jobs may otherwise be affected by the redundancy exercise. Legal debate continues as to what constitutes consulting in “good time” and where for example, there is a gap between the date a strategic decision is made to close a business and the date consultation begins, it will be for an Industrial Tribunal to decide whether the consultation did indeed begin in good time in the particular circumstances of the case. Failure to properly consult with employees may result in a Tribunal making a ‘protective award’ of up to 90 days pay for each affected employee; a potentially significant liability for any employer or indeed the Department for the Economy in the event the employer is insolvent and unable to discharge its liabilities.

In the event of dismissal, employees have the statutory right to receive a minimum period of notice of the termination of employment i.e. one week for every complete year of service, up to a maximum of 12 weeks’ notice. Employees with two or more complete years of service also have the right to receive a statutory redundancy payment which is based upon their gross weekly wage, age and length of service. A free online redundancy calculator is available at https://www.gov.uk/calculate-employee-redundancy-pay. Enhanced notice and redundancy payment entitlements may be provided for under an employee’s contract of employment.

If an employee believes they have been unfairly selected for redundancy, that they have not been properly consulted, afforded a fair process or received the correct notice or redundancy payment entitlements; they should exercise their right to appeal within the employer’s internal redundancy procedure in the first instance. Employees also have the right to pursue a claim to an Industrial Tribunal. The time limit for any unfair dismissal, redundancy payment or protective award claim is only 3 months from the effective date of termination of employment and as such legal advice as to the merits of any claim should be sought at the earliest opportunity.

Where an employer becomes insolvent, certain debts owed to employees may be paid from the National Insurance Fund. These debts include arrears of pay (including any protective award issued by an Industrial Tribunal), holiday pay and pay in lieu of notice. Employees may also be entitled to redundancy pay. The employees’ rights and remedies in respect of these debts (subject to certain limits) then transfer to the Department for the Economy and applications can be made via the Redundancy Payments Service.

Louise McAloon is a Partner in Worthingtons Solicitors, Belfast specialising in employment law. For legal advice, please telephone 028 90434015 or email louise@worthingtonslaw.co.uk.

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