Collective consultation: when does it start?

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A recent case has highlighted an important point for HR teams, collective consultation obligations might arise earlier than you think.

Collective redundancy consultation obligations arise wherever an employer ‘proposes to dismiss’ 20 or more employees as redundant within a 90-day period.

In Ellard v Alliance Transport Technologies Ltd, a company went into administration and began making redundancies. Initially, 15 employees were dismissed, with more following a few days later when a potential buyer pulled out.

The employer argued that, at the earlier stage, collective consultation rules didn’t apply because fewer than 20 redundancies were planned. However, the Employment Appeal Tribunal (EAT) disagreed.

When does a proposal to dismiss begin?

The EAT said the key question was whether the employer was proposing to dismiss 20 or more employees within a 90-day period. Importantly, a ‘proposal’ doesn’t have to be final. It can exist even if:

  • plans are still developing, and
  • other options (like a sale) are still being explored

In this case, by the time the first redundancies happened, a sale was no longer realistic and closing the business had effectively become the plan – even if not formally confirmed. That was enough to trigger the duty to collectively consult. Because consultation didn’t happen, employees were awarded 90 days’ pay.

What employers should take from this

Don’t wait until decisions are final before considering consultation. If large-scale redundancies are a real possibility, it’s important to seek advice early and keep under review whether alternative options remain genuinely viable. With compensation for getting this wrong now potentially reaching up to 180 days’ pay per employee, taking action at an early stage is more important than ever.

Here to Help

Our Employment team at Longmores helps employers manage redundancy processes and understand when collective consultation obligations may arise.

If you need advice on restructuring plans, collective consultation requirements or reducing the risk of protective awards, please contact Richard Gvero, Senior Partner and Head of Commercial and Employment.

Please note, the contents of this article are provided for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.