Restructuring and Redundancies in the Manufacturing Sector – Advice for Employers and Employees

Lancashire has a long manufacturing heritage, with major employers in sectors including chemicals, aerospace, automotive supply, food production and advanced engineering supporting skilled jobs and local supply chains across the county.

Sadly, a number of established sites are now facing difficult decisions about restructuring, reducing headcount or closing altogether as businesses contend with sustained financial and operational pressures.

A recent example is AGC Chemicals Europe’s Hillhouse plant in Thornton-Cleveleys, where production is due to cease by the end of 2026, affecting around 190 permanent employees and 18 agency workers, with further redundancies anticipated during the site’s wind-down. The company said the site had recorded losses for four years and could not remain viable in a volatile and highly competitive market.

More widely, manufacturers in Lancashire remain exposed to high energy and employment costs, international competition, changing demand, supply-chain disruption and the investment required to meet environmental and decarbonisation targets, all of which can increase the risk of site closures and redundancies.

Advice for manufacturing employees facing redundancy

If you are a manufacturing employee whose employer is re-structuring or closing a site; and you are faced with the threat changes to your terms of employment or redundancy it is crucial that you understand your legal position and the options available to you.

You should ensure you are aware of your entitlements, including notice pay and statutory redundancy pay. If you are unsure you should obtain the relevant documentation detailing your entitlements in such situations and the correct company procedures. A company may also have a contractual redundancy policy entitling you to enhanced payments.

Where a company proposes to make over 20 redundancies, collective consultation applies. Employers have specific steps and processes that it must adhere to. They are bound by law to follow procedures including regarding fair selection and consultation.

Understanding your legal position and options at an early stage may give you scope to protect your position at work or to negotiate an increased redundancy package.

Manufacturing employees; who are affected by a re-structure which is not a site closure or compulsory redundancy situation may also find themselves:

• Being consulted to vary their terms and conditions of employment (whether this is their role, responsibilities, pay; benefits, hours of work; shifts etc;);
• Offered a Settlement Agreement (sometimes described as an exit, severance, termination, or enhanced redundancy package) as a measure to fast- track formal processes and consultations;
• Invited to make an application to be considered for voluntary redundancy;
• Unfairly treated or discriminated against and perhaps employees believe this is because of long term ill-health or sickness absence; pregnancy or maternity leave; or retirement/age;
• Subject to lay off, short-time working or furlough leave; or
• Transferred to another employer by way of TUPE (The Transfer of Undertakings (Protection of Employment) Regulations 2006.

Advice for manufacturing employers considering restructuring the business

Manufacturing businesses considering a restructure should take employment law advice at an early stage. Whether the proposal involves closing a site, changing shift patterns, reducing headcount, relocating production or introducing new technology, careful planning can help the business achieve its commercial aims while reducing the risk of unfair dismissal, discrimination, breach of contract and protective award claims.

Before deciding that redundancies are necessary, employers should identify and document the genuine business reasons for the proposed changes and consider reasonable alternatives. These may include pausing recruitment, reducing overtime, seeking volunteers, reviewing the use of agency workers, offering retraining or redeployment, or agreeing temporary changes to hours or working arrangements. Any proposal to lay employees off or introduce short-time working should also be checked against the employment contracts and any applicable collective agreement.

A fair and meaningful consultation should take place before any final decisions are made. Employers should explain the reasons for the proposals, listen to employees’ suggestions and genuinely consider ways to avoid or reduce dismissals. Where 20 or more redundancies are proposed at one establishment within a 90-day period, collective consultation duties apply. The employer must consult appropriate trade union or elected employee representatives and notify the Redundancy Payments Service using form HR1. The minimum period before the first dismissal is 30 days for 20 to 99 proposed redundancies and 45 days for 100 or more.

Employers should also ensure that the selection pool and criteria are reasonable, objective and capable of being evidenced. Criteria should be applied consistently and checked for unintended discrimination. All affected employees should be kept informed and consulted, including those who are absent from work, for example because of sickness, pregnancy or family leave. Employers must also take account of the special rules on suitable alternative vacancies for employees who are pregnant or on certain periods of family leave.

Depending on the proposed restructure, manufacturing employers may need to address:

• Changes to roles, responsibilities, pay, benefits, hours, shift patterns or place of work, which may require employee agreement and consultation rather than simply being imposed;
• Offers of voluntary redundancy or Settlement Agreements, with clear and consistent terms and enough time for employees to obtain independent legal advice;
• Notice pay, statutory and contractual redundancy payments, accrued holiday and any enhanced redundancy scheme;
• Suitable alternative employment and trial periods, together with any priority rights that apply to employees who are pregnant or on certain periods of family leave;
• Employee relations, trade union recognition, collective agreements and clear communication with the remaining workforce; and
• Whether TUPE applies where work, services or part of the business is being sold, outsourced or transferred to another employer.

Employers should avoid confirming outcomes or issuing notices of dismissal until consultation has concluded. A clear written record of the business case, alternatives considered, consultation meetings, scoring decisions and responses to employee representations can be important if the process is challenged. Failing to follow the collective consultation rules can lead to a protective award of up to 180 days’ pay for each affected employee, in addition to other potential claims, so obtaining advice before announcements are made can be particularly important.

Farleys Solicitors specialise in all areas of HR and employment law for employees and employers. Our specialists have experience of providing on-site support for employers consulting on redundancies and settlement agreements for their employees. You can read about how we assisted an employer client here.

If you require advice and assistance, please contact our experts on 01254 606008, get in touch by email or use the online chat below.