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Mass redundancy – is it legal?

“Your employment is terminated with immediate effect on the grounds of redundancy. Your final day of employment is today.”

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Published 18 March 2022

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  • Business
  • Services
  • Employment law for employers

This was the shocking news received this week by 800 workers at P&O Ferries via a pre-recorded Zoom meeting. The approach taken by P&O Ferries has been widely criticised across various media channels showing an outpouring of support for affected workers.

Of particular concern are reports that employees received less than an hour’s notice of the meeting. Whenever an employer plans to make  20 or more roles redundant, there is a legal requirement to conduct ‘collective consultation’. The law is prescriptive about what that entails and how the process must be carried out. This includes setting minimum consultation periods of 30 days where there are 20 to 99 proposed redundancies, and 45 days where there are 100 or more proposed redundancies. The law also dictates the information that must be provided to employees, as well as how that information must be delivered.

Failure to comply with the collective consultation requirements can give rise to a ‘protective award’ claim of up to 90 days’ gross pay per worker. When that award is multiplied by the number of workers involved, the potential financial exposure can be very significant. Having recently advised clients in this area you will not be surprised to read that in our experience Employment Tribunals take a dim view of even minor failures to comply with the strict legal requirements unless there are exceptional circumstances. Therefore a complete disregard for the process would attract punitive damages.

Unfair dismissal claims are inevitable in cases like this for employees with over two years’ service. There will also be a requirement to make redundancy payments to employees with over two years’ service. In this situation, although there does not appear to be a reduced need for the type of work carried out by all affected staff, it is likely that the dismissals would still count as redundancies under the wider definition of ‘redundancy’ set out in the legislation governing collective consultations. Employers in these circumstances should also consider whether TUPE may apply.

It is possible for employers not to provide notice of termination of employment to employees, but employees would be entitled to a payment in lieu of notice and it is important to review the express contractual terms in this regard.

In advance of taking such extreme action, employers should carefully plan the best way to effectively communicate with staff at what will be a very sensitive and challenging time. Legal issues aside, this  will almost certainly cause reputational damage as P & O is discovering.

With many businesses still reeling from the impact of the pandemic amongst other things, it’s not uncommon to see businesses making large scale  redundancies or implementing the controversial ‘fire and re-hire’ at significantly less cost. The importance of taking legal advice in such circumstances cannot be overstated.

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Shorter Reads

Mass redundancy – is it legal?

“Your employment is terminated with immediate effect on the grounds of redundancy. Your final day of employment is today.”

Published 18 March 2022

Associated sectors / services

Authors

This was the shocking news received this week by 800 workers at P&O Ferries via a pre-recorded Zoom meeting. The approach taken by P&O Ferries has been widely criticised across various media channels showing an outpouring of support for affected workers.

Of particular concern are reports that employees received less than an hour’s notice of the meeting. Whenever an employer plans to make  20 or more roles redundant, there is a legal requirement to conduct ‘collective consultation’. The law is prescriptive about what that entails and how the process must be carried out. This includes setting minimum consultation periods of 30 days where there are 20 to 99 proposed redundancies, and 45 days where there are 100 or more proposed redundancies. The law also dictates the information that must be provided to employees, as well as how that information must be delivered.

Failure to comply with the collective consultation requirements can give rise to a ‘protective award’ claim of up to 90 days’ gross pay per worker. When that award is multiplied by the number of workers involved, the potential financial exposure can be very significant. Having recently advised clients in this area you will not be surprised to read that in our experience Employment Tribunals take a dim view of even minor failures to comply with the strict legal requirements unless there are exceptional circumstances. Therefore a complete disregard for the process would attract punitive damages.

Unfair dismissal claims are inevitable in cases like this for employees with over two years’ service. There will also be a requirement to make redundancy payments to employees with over two years’ service. In this situation, although there does not appear to be a reduced need for the type of work carried out by all affected staff, it is likely that the dismissals would still count as redundancies under the wider definition of ‘redundancy’ set out in the legislation governing collective consultations. Employers in these circumstances should also consider whether TUPE may apply.

It is possible for employers not to provide notice of termination of employment to employees, but employees would be entitled to a payment in lieu of notice and it is important to review the express contractual terms in this regard.

In advance of taking such extreme action, employers should carefully plan the best way to effectively communicate with staff at what will be a very sensitive and challenging time. Legal issues aside, this  will almost certainly cause reputational damage as P & O is discovering.

With many businesses still reeling from the impact of the pandemic amongst other things, it’s not uncommon to see businesses making large scale  redundancies or implementing the controversial ‘fire and re-hire’ at significantly less cost. The importance of taking legal advice in such circumstances cannot be overstated.

Associated sectors / services

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