UK News

All change for collective redundancy rules

April 2013

In this article, we analyse recent changes to the law on collective redundancies and explain how we can help organisations going through restructures.

The facts

The law on collective redundancies changed in April 2013:

  • in the event 100 or more employees at one establishment are at risk of redundancy, an employer must now consult on a collective basis for 45 days and not, as previously required, for 90 days;
  • fixed term contracts that reach their pre-agreed termination date are excluded from the collective redundancy consultation obligations; and
  • ACAS has published a 60 page (non-statutory) code of practice called 'How to manage collective redundancies'. This seeks to provide clarity on what determines an 'establishment' so an employer knows with which groups of employees it should collectively consult. The code attaches sample forms and process guidance.

Despite the reduction from 90 to 45 days for the length of consultation, the upper limit for the protective award for failure to inform and consult or to elect employee representatives remains unchanged and is still 90 days uncapped pay for each affected employee.

Commentary

  • 45 days: the Government's intention in reducing the minimum period for consultation was to help employers restructure more effectively, flexibly and in line with other EU countries. The new 45 day period is only a minimum and consultation must begin 'in good time' to allow meaningful consultation to take place and "with a view to reaching agreement". If effective consultation cannot be completed within the 45 days then employers will have to extend the consultation period. The consultation period for 20-99 redundancies remains unchanged at 30 days.
  • Fixed term contracts: the removal of fixed term contracts from the collective redundancy rules only applies to fixed term contracts that reach their expiry date and not those that are terminated on the grounds of redundancy earlier than the expiry date. Whilst this change will be welcomed by employers it will result in groups of fixed term employees becoming more vulnerable especially in the education sector.
  • Establishment: case law is unclear when it comes to determining what might be an 'establishment' for the purposes of collective consultation. ACAS sets out a series of questions and guidance. In one example they explain that an employer of a logistics company in which drivers work flexibly over 3 sites may need to consult with the drivers in all three establishments. This wide approach is not in line with the narrow approach followed by the courts in recent cases. The issue can unfortunately only be clarified by further case law.

How can we help?

Abbiss Cadres' combined offering of (i) law and tax; (ii) people consulting and (iii) communications enables our client's people to be treated fairly, sensitively and with the minimal negative ramifications for the organisation.

We work alongside our clients to deliver their message of change to departing and retained employees and to ensure compliance with employment law and tax implications.

Resources

ACAS code practice 'How to manage collective redundancies'

For further information or to discuss the issues raised, please contact Employment Partners Emma Clark or David Widdowson, or Head of Consulting Julia Lampshire on +44 (0)20 3051 5711.