Director information hub: Duties when considering redundancies
As a director, you have obligations to your company’s employees when considering redundancies.
Help us to improve the director information hub by completing a short feedback survey.
Making redundancies
In the course of running a business, as a director you may decide that redundancies are required. Directors have legal duties when they decide that redundancies may be necessary.
Obligations
The Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) sets out the actions that must be taken by a director on behalf of a company when considering redundancies.
The key legal duties are:
- to inform and consult with appropriate representatives when 20 or more redundancies are proposed within a 90 day period. Appropriate representatives are either trade union representatives or elected employees where no trade union is recognised
- to notify the Secretary of State in writing using the relevant HR1 form when 20 or more employees are affected
Consultation and notice period
For 20 – 99 employees
Consultation must last and notice be given to the Secretary of State at least 30 days before the first dismissal.
For 100 or more employees
Consultation must last and notice be given to the Secretary of State at least 45 days before the first dismissal.
For less than 20 employees
Where less than 20 employees are to be dismissed in a 90-day period, there is no requirement to consult. You should still follow a fair procedure to avoid any unfair dismissals.
Read more about making employees redundant.
HR1 – Advance notification of redundancy form that need to be completed.
Records
Director should keep full and accurate records of proposals and decisions about potential employee redundancies. The discussions and decisions, including confirmation of the consideration of the need for consultation and notification, should be recorded in the minutes of board meetings.
Consequences
Directors who fail to give the required notice to the Secretary of State may be prosecuted.
If you fail to consult appropriately, your employees or employee representatives may make a claim to an employment tribunal. They can make an award against the employer to pay compensation to the employees of up to 90 days’ pay each.
Where you have any doubt about how to deal with making employees redundant, consider seeking professional advice.