Unions call for more protection for workers in redundancy announcements

Redundancy announcements in the retail sector that were insensitively handled in May 2007 have refocused attention on the adequacy of the UK law on information and consultation with regard to redundancies. Some employers are not complying with the current regulations. As a result, trade unions have called for the existing legislation to be strengthened in order to give employees greater protection.

Examples of recent redundancy notices

On 4 May 2007, managers at the Robbs retail store, in Hexham, set off a fire alarm to round up staff to announce their redundancy. The fire alarm at the Robbs store was deliberately set off to clear the multi-level building of shoppers, while staff made their way to the designated fire point. The 140 staff were then told, in a short statement by management, that the store would be closing within two weeks. The redundancies were announced after efforts to find a buyer for the store had failed. (The firm’s parent company Owen Owen had gone into administration in February 2007.)

Workers at Robbs were shocked and angered by the way in which the news was communicated. Summarising the employees’ reaction, one worker argued ‘The way we’ve been treated is appalling and to find out in such a way has infuriated a lot of people’. However, the company, which is in the hands of administrators, explained that it seemed the best way to clear the store of shoppers and to gather all of the staff together in one place to make the announcement. The store’s administrators called the decision ‘efficient and practical’.

On 30 May, the supermarket chain Kwik Save revealed that it had closed one third of its stores across the UK, with the loss of around 700 jobs. The company posted ‘closed’ signs at 79 stores. According to one employee, the decision to close a store in Leeds was taken on a Monday evening. On Tuesday morning, staff were asked to come to the store, where they were told that the store had closed and were given a letter confirming their redundancy. The letter stated that, as the closure was taken at short notice, redundancy packages had yet to be worked out.

Commenting on the Kwik Save case, the Union of Shop, Distributive and Allied Workers (Usdaw) highlighted: ‘This is a huge number of closures, which will affect many workers … We will be seeking an urgent meeting with the company to clarify what redundancy package workers can expect, as well as discussing the long-term future of the business.’ In early June, it was reported that the company intended to reopen 20 of the 79 stores, as it now believed that they were economically viable.

Legal position

Under current legislation (section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992), an employer proposing to make 20 or more employees redundant is required to consult in advance with representatives of the affected employees. In addition, employers have a duty to act fairly and reasonably in handling redundancies, and to inform and consult affected employees individually, regardless of the number of dismissals proposed. Statutory redundancy pay is also payable.

If employers fail to carry out their obligations to consult over impending redundancies, trade unions, employee representatives or affected employees may bring a case against the employer at an employment tribunal. Where such a complaint is upheld, the tribunal can make a ‘protective award’, whereby the employer is required to pay employees up to 90 days’ pay.

Calls for stronger legislation

The aforementioned cases are the latest in a growing number of insensitively handled redundancy announcements that have hit the headlines. Other examples include job losses reported by the media before workers have been properly informed – so called ‘cornflake redundancies’ – and reported cases of workers being made redundant by text message. The closure of Peugeot’s Coventry plant (UK0605029I) and major job losses at Vauxhall’s Ellesmere Port plant (UK0606019I) last year prompted strong criticism by trade union leaders of the weakness of UK redundancy laws which, they allege, make UK workers more vulnerable to restructuring than their counterparts in some other EU countries.

The 2006 annual conference of the Trades Union Congress (TUC) supported a resolution arguing that ‘current redundancy laws lack clarity, are not strong enough to ensure meaningful consultation with trade unions and do not provide sufficient protection or compensation for affected staff.’ It also noted that ‘some employers fail to begin consultations as soon as redundancies are contemplated and have little intention of reaching agreement through a process of meaningful consultation’. The resolution called on the TUC General Council to seek changes to the existing legislation; however, whether the TUC’s campaign will persuade the government to strengthen the law remains to be seen.

Helen Newell, IRRU, University of Warwick