HR · 18 May 2018

Going through insolvency? Don’t fear collective redundancy consultations

It’s not easy to remain adrift when your company is undergoing a financial crisis. But instead of filing for bankruptcy, insolvency allows a business to sell off assets such as property in order to “stay alive”. In most cases, employees will find themselves without a job. Redundancy comes into play.

Part of the redundancy process involves consulting staff on what to expect, why it’s happening, how many will be affected, what the options are and in what ways youll support them. In situations where over 20 redundancies occur in one location, there must be at least 30 days? consultation before the first employee is set to leave. If more than 100 workers are involved, companies are given 45 days.

This requirement hasn’t been met in some of 2018’s larger insolvency cases, so going forward, companies will have to get employment law ducks in a row.

The government is set to publish guidance on collective redundancy consultations. In its own words, “You must follow collective consultation? rules or you will almost certainly be unfair and you could be taken to an employment tribunal.”

Consultation doesn’t need to end with an agreement, it added, but with employment tribunal fees removed, small business owners will need to ensure they follow proper procedures. If helmed by a fair leader then the risk of claims being brought up is significantly reduced.

Alan Price, employment law director at Peninsula, suggested the faucet has been turned and low value claims such as unpaid wages will reign supreme. Unfortunately, that means the business leader will have to become more synonymous with a law guru.

Not to the extent of knowing the ins and outs of every employment law section, but to keep abreast with the news, to do research and know which areas require urgent attention.

Price explained: Ensuring bosses are determining status correctly, applying employment rights to every member of staff and not subjecting individuals to unfair treatment is vital. Employers need to get this right to remove the risk of facing an employment tribunal claim and to avoid their business being scrutinised in public due to judgments now being published on the internet.



Shan? Schutte is the deputy editor of Real Business, with a particular specialism in employment and business law, human resources, information technology and sales/marketing.

Business Law & Compliance