If redundancy looms, do it right

With the UK economy now officially in recession, one the Bank of England predicts to be the deepest for more than 100 years, redundancies in the real estate sector are expected in the coming months.

To avoid falling into the legal quagmire that Twitter may find itself in – at least in the UK – real estate firms can follow some simple but important rules. Despite Twitter’s brutal approach, there is a process that must be followed and the financial and reputational risks of getting it wrong are steep.

If 20 or more employees are to be made redundant in the UK within a 90-day period, the employer must conduct a ‘collective consultation’ process with a recognised trade union. If there is no such trade union, appropriate employee representatives must be elected before the consultation can begin.

Where an employer wishes to make fewer than 100 people redundant, there must be a minimum consultation period of 30 days, rising to 45 days if more than 100 individuals are to be made redundant.

Importantly, those consultations must be meaningful, exploring ways to avoid or reduce redundancies and mitigating the effect of dismissals on affected employees. Businesses must also notify the Department for Business, Energy & Industrial Strategy (BEIS). Failure to do so is a criminal offence.

Businesses that do not follow a fair redundancy process may face claims for unfair dismissal from affected employees. Where they fail to inform and consult, businesses can also face a protective award of up to 90 days’ gross pay for each affected employee.

Employers may be able to rely on a ‘special circumstances’ defence in respect of some of the statutory obligations. However, it is only available in very limited situations and can be difficult to prove.

Finally, the reputational impact of a poorly handled redundancy process must be considered, particularly where employees are blindsided by the news of their dismissal. Staff and customer loyalty can easily be stretched, creating further financial difficulties.

Sinead Kelly is an associate in the employment law team at Collyer Bristow