Each month we will be asking a question on a hot topic to one of our employment specialists. This month, Thomas Fuller, Associate, considers the consequences of not complying with the collective consultation provisions under the Trade Union and Labour Relations (Consolidation) Act 1992.
“We wish to change over 100 employees terms and conditions, some of which we believe may not be agreed. However we would like to introduce these as soon as possible and therefore are considering simply dismissing and re-engaging the staff on the new terms – likely at the end of January. Can you set out the potential consequences of this so we can take an informed view of the risk in this approach?”
As you are aware, an employer is under an obligation to collectively consult with a recognised trade union, employee representatives, or the employees themselves, when they are proposing to dismiss as redundant at least 20 or more employees. Collective consultation is the process of an employer engaging with, for example, a recognised trade union in respect warnings of the potential redundancies, consulting with the trade union on the selection criteria, and considering alternatives to dismissal, such as alternative employment.
Whilst an employer can avoid a claim by showing there were special circumstances making it not reasonably practicable to collectively consult, if this defence fails then the affected employees can claim a Protective Award of up to 90 days’ gross pay per employee. These claims therefore result in sizeable awards against employers who fall foul of their collective consultation obligations.
The ACAS Code of Practice on Grievance and Disciplinary Procedures has been in force since 2015, which allows Employment Tribunals to uplift compensation by up to 25% in the event an employer fails to follow a fair and reasonable disciplinary or grievance procedure. The Government’s most recent changes, which come into effect from 20th January 2025, have now introduced a similar uplift to Protective Awards, which allows Employment Tribunals to take into account any failure to comply with a relevant Code of Practice to uplift Protective Awards by up to 25%.
You should therefore weigh up the costs of the management time saved in failing to inform and consult, versus the likely value of claims, given this will relate to 100 employees. Collective consultations can be onerous, but following the high profile P&O case in 2022, employees have never been more aware of their rights. Therefore the chances of claims being brought are much higher, and now of higher value, than they once were.