UK News

Proposed changes to collective redundancy rules

September 2012

The responses to the government's second consultation on the current 'collective redundancy' laws are now being considered and the resultant changes are likely to be far-reaching.

The background

Employers are currently required to collectively consult with employee representatives for 30 days if they propose to make 20 or more employees redundant in a 90 day period. If 99 or more employees might be made redundant then the requirement to consult increases to 90 days. The first dismissal may not take place until this 30 or 90 day time period has expired.

At the end of 2011 the government issued a 'call for evidence' to seek views from key stakeholders on both the time period for and the intricacies of the collective redundancy laws. The responses were received in January 2012.

The proposals

Having received and considered the above responses, the government concluded in its June 2012 consultation paper that "Legislation is too restrictive, while government guidance is not clear enough." As a result it is currently consulting on reforms that focus on:

  • reducing the 90 day collective consultation period for large scale (99 or more) redundancies to 45 or 30 days;
  • introducing a new, non-statutory code of practice addressing key issues (the "Code"); and
  • improving guidance for employees and employers on the support that is available from the government.

The government is confident that reducing the consultation period to 45 or 30 days will not dilute the quality of the consultation process. They explain that they intend to "reinforce the importance of meaningful consultation with improved guidance to highlight that the new time period will be a minimum and the consultation should continue beyond this period wherever necessary" (our emphasis).

Employers should be aware from the words highlighted above that, even if the consultation process is reduced to 30 or 45 days, employee representatives and unions may still require employers to lengthen the consultation process beyond any prescribed period. Consultation must still be undertaken "with a view to reaching agreement" and this may mean it has to continue beyond the minimum period.

The government have suggested that Code will include much-welcome guidance on:

  • when a consultation should start;
  • who and what should be included in the consultation;
  • who should be consulted;
  • how the consultation should be conducted;
  • when the consultation can be considered to be complete;
  • defining "establishment"; and
  • how the consultation should apply to fixed term workers.

Commentary

The intention behind the proposed reduction in the consultation period is to enable employers to respond to market conditions more quickly, to reduce the number of redundancies and to reduce the negative impact on employees' morale and productivity. From an employers' point of view this is to be welcomed. Equally the opportunity for guidance has long been necessary and the Code should fill this gap.

Abbiss Cadres' partner Emma Clark formed part of the Employment Lawyer's Association ("ELA") working party that discussed and sent the government ELA’s response to both the 2011 consultation paper and the June 2012 proposals.

Resources:

Government proposals

For further information or to discuss the issues raised, please contact Emma Clark or David Widdowson on +44 (0)20 3051 5711.