What you can learn from Thomas Cook redundancy process

09/10/2019

Travel giant Thomas Cook ceased trading last month, leaving thousands of staff facing redundancy.

However, there have been accusations that Thomas Cook failed to follow the proper redundancy procedures and could face penalties as a result. But do you know the correct procedure?The 178-year-old business went into compulsory liquidation on 23 September 2019, after last-minute talks to save the firm fell through.
Headlines have focused on 150,000 Brits stranded abroad. But in the business world, the redundancy toll – 9,000 in the UK, a further 12,000 abroad – has left employers reflecting on their own policies. ​

Getting redundancy right​

Industry press has reported dozens of staff complaints regarding Thomas Cook’s redundancy process. Some employees claim that the business didn’t follow procedure – an expensive mistake for a company to make. 
Redundancy procedures in the UK are designed to give staff time to search for new employment. They include guidance on avoiding redundancies in the first place, alternatives such as short-time working, providing the option of voluntary redundancy where possible, and statutory redundancy payments. 
The key area in this case, though, is redundancy consultations.​ 

Collective consultations​

Collective consultations – often referred to as redundancy consultations – are a framework that employers must follow if they are making ’20 or more redundancies within any 90-day period at a single establishment’.

While smaller-scale redundancies aren’t explicitly covered by these regulations, it is considered good practice to abide by them. An employment tribunal may decide that you have engaged in unfair dismissal if you don’t properly consult with staff.

Employers must follow these steps:

  1. Notify the Redundancy Payments Service (RPS).
    • a.For 20-99 redundancies: 30 days before the first redundancy
    • b.For 100 or more redundancies: 45 days before the first redundancy
  2. Begin consultations – either with trade union representatives or with staff directly
  3. Provide the following information to the staff or their representatives:
    • a.The reason redundancies are happening
    • b.The number of employees being made redundant
    • c.Which categories are seeing redundancies, and the number of employees being made redundant from each category
    • d.Your plans for selecting who will be made redundant
    • e.Your plans for carrying out the redundancies
    • f.How redundancy payments will be dealt with
  4. Answer any requests for more information
  5. Give termination notice to the staff who will be made redundant
  6. Give redundancy notice once all the above is complete

Further reading ​

The full Government guidelines on redundancy can be found at Gov.UK guidelines on redundancy consultations.      

What’s the penalty for getting it wrong? ​

  • Failure to notify the RPS of impending redundancies can result in a fine of an unlimited amount
  • If staff aren’t properly consulted before redundancies, they could be entitled to up to 90 days’ gross pay 

Reviewing your redundancy procedures

Even if redundancies don’t seem to be on the horizon, it’s sensible to make sure your contingency plans are solid. The last thing a business needs during a turbulent time is the fallout from not following procedure.

Pinney Talfourd is one of the leading employment law firms in Essex and London. We understand that it is difficult and time consuming to keep up with the latest changes in employment law, which is why we offer a free employment law review amongst our services for employers. Don’t hesitate to contact us.This article was written by Alex Pearce, Senior Associate in the Employment Law Team at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of October 2019.

09/10/2019

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