Tue 29 Dec 2015

Risk of personal liability for failure to collectively consult

Where an employer proposes to make 20 or more redundancies at one establishment in a 90 day period it is required to provide prescribed information about its proposals and to consult with appropriate representatives. 

The minimum consultation period is 30 days, rising to 45 days where 100 or more employees are affected.  It is well known within HR circles that the penalty for breaching these obligations is a protective award of up to 90 days pay per affected employee.

It is also widely known that an employer must notify the Secretary of State of the proposed redundancies in advance using an HR1 form.  What is perhaps less well known is the criminal penalty for failing to notify the Secretary of State - an unlimited fine.  Few people are alert to the possibility of a criminal charge being brought against an individual rather than the employer.  However, recent prosecutions of directors and CEO's of high profile companies including Citylink and USC show that the risk of personal liability is much higher than previously thought.

For a criminal charge to be brought against the individual the offence must be shown to have been committed with the consent or connivance of, or to be attributable to the neglect of any director, manager, secretary or other similar officer of the employer.  It is therefore a potential concern for senior managers as well as directors. 

However, ensuring the HR1 form is submitted at the appropriate time is often far from straight forward.  To ensure it is submitted on time a variety of issues fall to be considered including assessing when the dismissals are "proposed" and what counts as an "establishment" for the purposes of applying the legislation - both matters which have troubled Tribunals and employers alike for many years.  While the "consent or connivance" of directors and senior managers in an offence of this type can perhaps more easily be controlled, those involved in these processes need to take positive steps to ensure they do not fall foul of this statutory duty through neglect of their responsibilities. 

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