Reducing headcount is one of the key cost savings when creating a shared service centre. This often means triggering the test for whether an employer must start a collective consultation process: do you propose to make 20 or more employees redundant within a 90-day period at one ‘establishment’?
This test can be deceptively difficult to apply because of two issues. First, the law is not clear on exactly what an ‘establishment’ is. Generally, employees based at separate physical sites will be in different establishments, but not always. You should take a close look at the law on this if your project involves making 20 or more employees redundant across your group (even if you reach that threshold considering unconnected redundancies).
The second area of difficulty is when exactly collective consultation should begin – when redundancies are ‘proposed’. The law states that ‘proposing’ precedes the actual decision to make the redundancies. But often the redundancies will follow almost inevitably from a decision taken at board level before detailed HR or legal involvement. This often leads to the creation of unhelpful documents (for example, board minutes and reports) that refer to the dismissals as a foregone conclusion, undermining a genuine consultation.
Failure to properly collectively consult when required to do so can be an expensive mistake – up to 90 days of pay per worker. You will also need to hold one-on-one consultation meetings with affected employees, although this can take place alongside the collective consultation process.