1. The meaning of consultation?
Consultation – in whatever form - should be genuine, appropriate and fair. Where there is an obligation to consult, the relevant legislation will identify the extent of that obligation. In headline, it involves giving employees / the body consulted a fair and proper opportunity to understand fully the matters about which they are being consulted, and to express their views on those, with the consultor thereafter considering those views properly and genuinely.
In order for an employer to consult properly, it must have an open mind and still be capable of influence about the matters which form the subject matter of consultation. This suggests that consultation will only be meaningful if it happens at a formative stage rather than when there is a fait accompli.
2. Who should be consulted?
Depending on the subject matter, consultation can either be directly with employees or indirectly via employee representatives (eg trade union representative or non-union elected representatives).
Obligations with regard to individual consultation are distinct from an employer’s collective obligations (the two processes will often run in parallel and may sometimes overlap). We consider both in more detail below.
Care should be taken to ensure that all employees are properly represented, including those absent from work eg on long term sickness absence or family leave.
In the absence of specific guidance on whether collective or individual consultation can be carried out with employees who are on furlough, or whether it would be caught by the restriction on doing work, our view is that employers can consult directly with employees whilst they are on furlough leave. Those employees are not providing services or generating revenue for or on behalf of the employer, so it is likely to be permissible. HMRC’s guidance does make it clear that employee representatives may undertake duties and activities for the purpose of individual or collective representation while they are on furlough leave. It would seem inconsistent that employers could consult with representatives but not directly with employees.
3. About what?
Employers may need, or choose, to consult with employees for a variety of reasons. Perhaps the most common situation when employers are obliged to consult with employees is in a redundancy exercise, however it is not limited to that and it is important for employers to understand when else the duty to consult might arise. A (non-exhaustive) list of some of the most common reasons are below:
- Redundancy – consultation with individual employees is fundamental to the fairness of any dismissal for redundancy, so employers are obliged to carry out individual consultation in advance of redundancies. Attempts by employers to persuade tribunals that a redundancy dismissal was fair despite the lack of individual consultation have largely failed.
- Collective consultation - in addition to individual consultation, s188 Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) requires employers to consult “in good time” about redundancies in circumstances where it is proposed to “dismiss as redundant” 20 or more employees at one establishment over a period of 90 days or less. For a reminder about the duty to collective consult, and how to handle a collective consultation process, see our blog on Top tips for collectively consulting employees. An important point to note, however, is that under s195 TULRCA, the words “dismiss as redundant” are wider than the definition of redundancy for the purposes of unfair dismissal, and mean dismissal “for a reason not related to the individual concerned". That definition is wide enough for the following scenarios to give rise to an employer’s obligation to collectively consult:
Redundancy situations in the narrow sense (as defined by s.139 Employment Rights Act 1996 (ERA)).
Re-organisations that fall outside a strict redundancy situation in the sense intended by ERA but which result in dismissals.
Changes to employees’ terms of employment where the employer proposes to bring these about by dismissing the employees and offering re-engagement on new contracts (the "fire and re-hire" option) – see below for more information.
A separate, very interesting question is whether the way in which the COVID-19 pandemic affects a particular employer might amount to “special circumstances” providing a potential defence for an employer who does not comply with the requirements to inform and consult in accordance with s.188 TULRCA. This has obviously not been tested, but it will be interesting to see if anyone tries.
- Changes to contractual terms – as we know, terms evolve, as do the needs of the (i) business (ii) the role concerned, and (iii) the employee. Never has this been more true in light of the impact of coronavirus. Employers seeking to change terms and conditions should always consult with employees with a view to reaching agreement on changes to contractual terms. In addition, as mentioned above, they may also have an obligation to consult collectively. Again, see our blog post on Top tips for collectively consulting employees for more details on this. The employer will need to consider whether the change is one which a union, European Works Council and/or employee representatives need to be consulted on in advance. Similarly, it should be established whether the term comes under the remit of a live collective agreement.
- Health and Safety – the law requires employers to consult with employees on health and safety at work matters – for example the findings of a risk assessment. This has become particularly important for employers during the coronavirus pandemic, especially when planning how to return employees to the workplace. Where an employee recognises a trade union which has appointed, or is about to appoint, safety representatives under the Safety Representatives and Safety Committees Regulations 1977, then the employer must consult those safety representatives on matters affecting the group or groups of employees they represent. Any employees not in groups covered by trade union safety representatives must be consulted by their employer under Health and Safety (Consultation with Employees) Regulations 1996. Under this, the employer can choose to consult directly with employees or through elected representatives. If the employer decides to consult employees through elected representatives, then employees will have to elect one or more people to represent them.
- Transfers under TUPE – where there is a relevant transfer of an undertaking under TUPE, the buyer and seller must inform and consult representatives of any of their own employees who will be affected by the transfer of measures taken in connection with it.
- Pension changes – additional consultation requirements will apply where an employer wishes to make changes to an employee pension scheme. This includes obligations under the Pensions Act 2004.
4. How to conduct effective and meaningful consultation?
Genuine consultation requires employers to:
- Consult when the proposals are still at a formative stage – as mentioned above, consultation must take place before final decisions are made and the employer should not prejudge the outcome of consultation by making firm plans until it is the process has concluded.
- Give employees adequate information on which to respond – clearly explain any planned changes to employees so employees can understand the proposals on which to provide feedback. If collective consultation is required, in order to comply with its collective consultation obligations, employers must provide certain prescribed information to employees (again see our article on collective consultation for more detail).
- Give employees adequate time in which to respond – other than in respect of collective consultation, there are no prescribed timescales for how long consultation should last. However, shorter periods may run the risk of complaints that consultation has not been sufficient or genuine. Sometimes, the needs of the business or situation may mean it is impossible to consult for very long, in which case that should be explained to employees. However generally speaking, if consultation is going to be effective, don’t rush it. Given the logistical challenges presented by the current pandemic, this is particularly important and employers should be mindful of this when planning consultation timetables and meetings.
- Give conscientious consideration in repose to the consultation – employers should listen to, and take account of, the views of employees and then make objective, reasonable decisions that are fair in the circumstances. Encourage a free exchange of ideas and views and give employees the opportunity to raise any objections – it may be that, as a result of employee suggestions or ideas, the planned changes can be amended or adapted. Where an employee’s ideas improve a decision and can be implemented, due credit and recognition should be given.
Consultation does not mean that the employer is obliged to adopt any or all of the views expressed by the person or body whom it is consulting. There may be good practical or financial reasons for not doing so. But if employers reject employees’ views, the reasons for doing so should be explained.
5. Methods of consultation – thinking about the logistics
Consultation methods will vary from organisation to organisation and depending on the matters which form the subject matter of consultation. There is no single arrangement which will suit all organisations. Employers should therefore spend time planning the consultation procedure(s) that will best suit their organisation. Aside from the issues to be discussed, this will include considering the size and structure of the organisation, management style, culture and employee relations, as well as any recognised trade unions.
When consulting directly, employers may choose a variety of different forms of communication, though employers generally hold town hall type meetings to inform employees of what is proposed, followed by individual one to one meetings with those affected once employees have had the opportunity to reflect on the discussion.
Technology is likely to assist employers in overcoming the additional COVID-related challenges of employees social distancing, self-isolating or working from home. In turning to technology, employers should make sure that representatives and employees are able to access the appropriate equipment and technology (eg video conferencing facilities) and that appropriate safeguards are in place to ensure confidentiality and compliance with data protection legislation (for example, by ensuring that the technology used to host the meeting is secure and that only the appropriate individuals receive invitations).
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, July 2020