Mazda’s managing Director Jeremy Thompson recently announced plans which will see Mazda cut up to 20 Mazda dealerships in the UK in order to create a sustainable and profitable business for the entire Mazda network. Such a plan will see Mazda’s network in the UK reduce from 155 sites to 135 sites. This strategy will lead to mass redundancies across the Mazda network in a potentially short period of time. Whilst ensuring that a proper redundancy procedure must be followed, Mazda must be aware that this may also trigger the need for collective redundancy consultations.
Mazda, and any automotive manufacturers who find themselves in a similar position are reminded that if an employer proposes to make large scale redundancies of 20 or more employees at a single establishment within a period of 90 days or less (collective redundancies), it must consult on its proposal with representatives of the affected employees and also notify the Department for Business Innovation and Skills (“BIS”). Consultation must begin in good time, and at least 30 days before the first dismissal takes effect. Where 100 or more redundancies are proposed, consultation must begin at least 90 days before the first dismissal takes effect.
It is important to point out that if each of the dealership sites is a separate establishment and there are fewer than 20 redundancies proposed at each site, there may be no statutory duty to consult at all. Any duty to consult will only arise in respect of establishments where at least 20 redundancies are proposed.
In addition to the added requirement to consult with representatives of the affected employees and also notifying BIS, a fair redundancy procedure will need to be followed. Therefore Mazda will still be under an obligation to establish pools for redundancy and selection criteria, consult with the employees in danger of redundancy, score them according to the objective selection criteria that have been set and carry out further consultations. Additionally Mazda must also ensure that each consultation meeting is followed up in writing by way of a letter to the affected employees.
Mazda UK sold just over 31,000 cars last year down nearly 69% from the previous year’s sales of circa 45,000 cars. Mazda’s market share also dropped from 2.2% to 1.6%. Jeremy Thompson indicated that Japanese automotive manufacturer expected similar numbers for 2012. The average dealership only broke even with the top 25 dealerships recording profit margins of only 3%.
With such a downturn in sales becoming increasingly common amongst automotive dealerships, given the current economic crisis, it is unlikely that Mazda will be the last major manufacturer to have to resort to such measures. Any other such manufacturer should be aware of the risks in not following the advice stated above, as a failure to follow it may result in greater expense, by way of employment claims against them.