Basic obligation

An employer must consult ‘appropriate representatives’ of employees if it is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

Note: before a TUPE transfer occurs, the transferee organisation, even though it is not yet the 'employer' of the affected employees, may, with the consent of the transferor organisation, consult representatives of those employees about redundancies it proposes to make once the TUPE transfer has happened.   

‘Establishment’

This is defined as the ‘unit’ to which the workers at risk of redundancy are ‘assigned’.

One ‘establishment’ can be the amalgam of several workplaces at separate physical locations.  Conversely, it is possible to have separate ‘establishments’ based at the same site.  An establishment can sometimes be found to exist even where the affected workers do not have a specific, ‘physical’ workplace provided by the employer at all (for example, field sales representatives).

‘Redundant’ and ‘proposing to dismiss’ – who is counted?

The definition of ‘redundant’ is broader than that used for redundancy payment purposes.  It covers any reason ‘not related to the individual’ – so it extends to proposed changes in terms and conditions and/or working arrangements that do not eliminate posts (reduce the staff) or alter the essential nature of jobs.

Whatever types of ‘redundancy’ are involved in an exercise, the question whether an employer is ‘proposing to dismiss’ employees has to be answered by reference to what might be necessary.  For example, an employer might hope, often justifiably, that there will be sufficient volunteers to meet the targeted reduction or that employees will agree to changes in terms and conditions.  But, if those hopes are not borne out, the desired results would require the termination of existing contracts of employment (a ‘dismissal’).  That possibility must be taken into account in counting the number of proposed dismissals.

However, employees on fixed-term or other limited-term contracts, where the term is due to expire anyway during the period of the ‘redundancy exercise’, need not be counted as ‘proposed dismissals’.

Employee representatives 

‘Appropriate representatives’ are representatives of a recognised trade union or representatives elected by the employees.

If there is a recognised trade union for some or all categories of affected employees, the employer must consult only its representatives about those employees affected by the redundancy and who are covered by trade union recognition.

There is a loosely-prescribed method for electing employee representatives.  This features the following requirements or standards:

◉ there should be sufficient representatives to reflect the interests of all the affected employees and of the groups within that number

◉ candidates for election must be affected employees

◉ no affected employee may be excluded from candidacy or from voting

◉ representatives can be elected to represent all affected employees or a particular group (the employer's choice)

◉ each voter should have as many votes as there are candidates, either overall or, if applicable, in the voter’s designated group

◉ voting should generally be in secret.

Timescales

Consultation must begin ‘in good time’ and no less than 30 days or, for 100 or more proposed redundancies, no less than 45 days before the first redundancy dismissal is due to take effect.

Preliminary information that must be provided to the representatives

Initial written notification to appropriate representatives must provide information about the reasons for the proposed redundancies, the numbers and descriptions of the employees affected, the number of agency workers and the type of work they do, the proposed selection procedures, the proposed method of carrying out the dismissals, including the period over which they are to take effect, and the proposed method of calculating any non-statutory redundancy payments.

Scope of consultation

Consultation with representatives must be with a view to reaching agreement and must cover ways of:

◉ avoiding dismissals

◉ reducing the number of dismissals

◉ reducing the effects of dismissals.

The first two subjects for consultation mean that it may also be necessary for the employer to consult about, or at least to explain or discuss, the business or organisational plan that has resulted in the proposal for redundancies.

Fair and complete collective consultation 

Fair consultation about redundancy means consultation when the proposals are still at a formative stage.  It ‘involves giving the body consulted a fair and proper opportunity to understand fully the matters about which it is being consulted, and to express its views on those subjects, with the consulter thereafter considering those views properly and genuinely’ (Lord Justice Glidewell in R v British Coal Corporation & Secretary of State for Trade and Industry ex parte Price).  

The law requires an employer to terminate any contracts of employment or issue notices of dismissal only when the process of collective consultation has been completed.  But this does not mean that a full 30 or, as the case may be, 45 days’ consultation must have occurred.  It is possible for the employer and representatives of the staff to agree that collective consultation has been completed before this or, without such consensus, for it to have run its course even though there is no agreement.  The obligation is only to commence consultation at least 30 or 45 days beforehand 

Consequence of non-compliance 

Failure to consult gives rise to a complaint to the employment tribunal and, if the employer is liable, to a ‘protective award’ of up to 90 days’ pay (for this purpose, there is no statutory limit on the amount of a day’s pay).  If the successful complaint has been brought by the trade union or elected representatives (rather than by an individual affected employee denied their rights), this award will apply to each and every employee affected by the failure (whether yet made redundant or not). 

The maximum award is the starting point for the tribunal: a lesser amount will only be awarded if there are mitigating circumstances surrounding the employer’s non-compliance. 

Basic duty and timing

The employer’s obligations to consult arise before a ‘relevant TUPE transfer’ of a business or undertaking.  

The duty is initially to provide information, in writing, to appropriate representatives (see above) of ‘affected employees’ long enough before the transfer to allow any necessary consultation to occur.

‘Affected employees’ of the existing organisation (transferor) or the incoming organisation (transferee) are those who may be affected by the transfer or by measures taken in connection with the transfer.

Information to be provided

The required information is:

◉ reasons for the transfer and its approximate timing

◉ the legal, economic and social implications of the transfer

◉ the numbers of, and the types of work done by, any agency workers

◉ the measures envisaged by the employer or the fact that no measures are envisaged

◉ in the case of the transferor, the measures that it envisages the transferee will take with the transferred employees.  Or, if it envisages that no measures will be taken, that fact.  (To enable the transferor to comply with this, the transferee is under a duty to provide the relevant information to the transferor in good time.)

Possible duty to consult

The duty of those employers who do envisage taking any pre-transfer measures with their own employees is then to consult representatives with a view to reaching agreement on them.

No minimum timescale for commencing such consultation is set down, unless the measure is ‘redundancy’ and the numbers and timescales bring into play the need to consult representatives of employees about redundancies (see above).

If a transferee envisages taking measures after the transfer, TUPE itself imposes no duty on the transferee to consult before the transfer (because the transferee is not yet the employer).  

However, if the measure is redundancies, the proposed number (possibly in any single establishment) is at least 20 and they will occur within 90 days or less, the transferee can undertake the separately required collective redundancy consultation with employee representatives (see above):

◉ after the transfer, once the transferee has become the employer; or  

◉ before the transfer, provided the consent of the transferor has been obtained.

Consequence of non-compliance

Failure to inform or, if applicable, to consult gives rise to a complaint to the employment tribunal and possible compensation (of up to 13 weeks’ pay, with no statutory cap) to each employee affected.

The transferee is jointly and severally liable with the transferor for other awards of compensation against the transferor arising from a failure to inform or consult.

However, if the transferor’s breach arises from the transferee’s failure to give the transferor information about the proposed measures, compensation is normally payable by the transferee.

There is an obligation on the employer to consult representatives of employees (or employees individually) on certain health and safety matters.

Scope and activation 

The rules apply to undertakings with 50 or more employees in the UK.

The employer’s obligation to consult arises only after a ‘trigger’ request.  Should employees make a valid request, employers are under an obligation to establish means for information and consultation to give the employees a better idea of potential changes in their employment.

To be valid, a request must be made in writing by 10% of the employees in the undertaking, subject to a minimum of 15 employees and a maximum of 2,500 employees.

Change alert: From April 2020, the threshold required for a request to set up information and consultation arrangements will reduce from 10% to 2% of employees, subject to the existing minimum of 15 employees.

Voluntary and pre-existing agreements 

After the receipt of a request, and subject to the provisions about a pre-existing agreement (see below), the employer has six months (extendable by agreement) in which to negotiate a voluntary agreement with employee representatives.

If a voluntary agreement is reached, it must

◉ set out the circumstances in which the employer will inform and consult the employee

◉ provide either for dealing with employee representatives or for the information and consultation to be directly with employees (or both)

◉ be recorded in writing and date

◉ cover all of the employees in the undertaking

◉ be signed by the employer and approved by the employees.  

The regulations provide for the possible retention of any pre-existing agreements endorsed by the workforce.  A valid pre-existing agreement must

◉  be in writing

◉ cover all the employees in the undertaking

◉ set out how the employer will inform and consult the employees

◉ be approved by the employees.

If the employer already has a pre-existing agreement in place when it receives a valid request, it may ballot the workforce to seek endorsement of the request.  If, after a ballot, a minimum of 40% of the employees (constituting a majority of those who actually voted) endorses the request, the pre-existing agreement becomes invalid and negotiation on a voluntary agreement must commence.  But, if less than 40% endorses the request, the pre-existing agreement will continue.

Standard, default provisions

If no voluntary agreement is reached by any required negotiation, ‘standard’ provisions will apply.  This will require the establishment of an information and consultation committee, representing all employees in the undertaking, after the election of representatives.  The number of representatives is proportional to the number of employees (one representative for every 50 employees up to a maximum of 25 representatives).

The standard provisions require the employer to inform and consult the employees and to provide

◉ information on the recent and probable development of the undertaking’s activities and economic situation

◉ information and consultation on the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, particularly if there is a threat to employment within the undertaking

◉ information and consultation, with a view to reaching agreement, on decisions likely to lead to substantial changes in work organisation or in contractual relations between the employer and its employees.  These include decisions entailing collective redundancies and business transfers – areas that are covered by separate obligations to consult employee representatives. 

Subsequent requests from employees

If the employees have made a request, or negotiations have been initiated by the employer, no further request may be made for three years after the conclusion of a negotiated agreement or the application of the standard provisions.

Consequence of non-compliance 

If an employer has failed to establish arrangements for information and consultation, an employee may complain to the Central Arbitration Committee (CAC).  The CAC will deal with any disputes about the operation of such arrangements.  Sanctions for employers involve a range of remedies based on orders to perform obligations under the legislation and financial penalties of up to £75,000, depending on the size of the employer and other factors.  If the CAC upholds a complaint that bears a financial penalty against an employer, an employee may make an application to the Employment Appeal Tribunal for payment.

Scope of duty

The duty to consult on pensions applies to a ‘relevant employer’ with 50 or more employees.

A ‘relevant employer’ is one operating or participating in an occupational pension scheme (other than a small or public service scheme) or a personal pension scheme with the employer’s contributions.

The duty to consult covers a ‘listed change’ to future arrangements under the applicable scheme.  

Listed changes for occupational schemes:

◉ raising the pension age

◉ closing the scheme to new members

◉ stopping future accruals

◉ ceasing the employer’s contributions

◉ introducing or increasing the members’ contributions

◉ reducing the employer’s contributions (money purchase only)

◉ converting to money purchase (defined benefit only)

◉ changing the basis of future accrual (defined benefit only).

Listed changes for personal schemes:

◉ removing or reducing the employer’s contributions

◉ increasing the members’ contributions.

If the trustees or managers of a scheme instigate the listed change, they must notify the relevant employer(s) in writing.

Each employer must provide written information to those employees who are ‘affected members’ and any existing, appropriate representatives of such people.  

The information for 'affected members' must include:

◉ a description of the change and its likely effects

◉ appropriate background information 

◉ an indication of timescale.

Existing 'appropriate representatives' are those:

◉ of a recognised trade union

◉ elected or appointed under a negotiated voluntary agreement or ‘standard’ arrangement under information and consultation regulations

◉ elected or appointed under a pre-existing agreement for the purposes of the information and consultation regulations

◉ previously elected for purposes of occupational and personal pension scheme regulations.

The subsequent consultation by the employer must be with:

◉ one or more of the types of existing appropriate representative above and/or (if a pre-existing or negotiated agreement under the information and consultation regulations provides for direct consultation with employees) with the affected members directly; or

◉ if existing representatives or direct consultation arrangements do not exist or do not cover some or all affected members:

◉ representatives newly elected for the purposes of occupational and personal pension schemes regulations; or

◉ if no such representatives are elected for some or all affected members, those affected members directly.

The consultation period 

This must be at least 60 days.  At its outset, an employer may specify the date for the end of consultation or for the submission of written responses.

If no responses are submitted by a specified end-date, the consultation is complete.  If responses are received, the employer must consider them before deciding whether to make the proposed change.  For this purpose, if the employer was not the initiator of the proposal for change, it must pass such responses to the initiator.  

Enforcement 

This is by a complaint to The Pensions Regulator, which can order the payment of a ‘civil penalty’ of up to £50,000 for a breach (but the regulator cannot order the reversal of the relevant change).