In the past week, the Department for Business, Innovation and Skih3ls has published a consultation document that contains various proposals to transform the collective redundancy rules – the intention being to make them more flexible and to improve consultation with employees. There is a perception that the existing regime of collective redundancy consultation is both unsuitable for the current UK labour market and contributes to poor quality consultation and the Government now appears intent to address this.
The Government's proposals aim to achieve the following objectives:
- improve consultation quality
- improve the ability of employers to respond to changing market conditions, and
- balance the interests of the employees who are made redundant with those who remain
Consultation
The consultation highlights three principal proposals to achieve the Government's objectives:
1. To reduce the 90-day minimum consultation period for larger redundancies
At present, where an employer is proposing to dismiss as redundant 100 or more employees at a single establishment in the United Kingdom within a 90 day period, the employer must consult with representatives of the affected employees at least 90 days prior to the first dismissal.
In light of criticism that this prescribed time limit is both inflexible and can prevent employers from restructuring as effectively and efficiently as they would like (which jeopardises the UK's commercial business advantage), the Government proposes to reduce the minimum 90-day period of consultation to either:
- a 30-day minimum period for all collective redundancies, or
- a 45-day minimum period for planned redundancies of 100 or more employees
The Government suggests that:
- this change will enable employers to restructure more quickly and save them administrative and wage costs, thereby potentially reducing the number of redundancies
- employees will benefit from greater certainty and it will reduce the negative impact on morale and productivity of drawn-out consultations with inevitable outcomes
- those made redundant will be able to take advantage of career resources and begin their job search sooner, and
- finally those who are not made redundant will face a shorter period of uncertainty and will be better placed to continue their career in the organisation
Notwithstanding these proposed changes, the Government proposes to retain the maximum "protective award" of 90 days pay that is payable by employers to each employee affected by a failure to consult, as such an award is linked to the employer's efforts to comply with its information and consultation obligations, rather than the length of the consultation period.
2. To introduce a new non-statutory Code of Practice
The Government has also proposed a new, non binding Code of Practice that will set out guidelines as to the requirements of a "good quality" consultation, whilst allowing enough flexibility for the parties to tailor the consultation process to their particular circumstances. The Code aims to provide advice that will help the parties reach agreement, which will support effective restructuring, and ensure that the reduction in the 90-day minimum period does not lead to superficial consultation. It is proposed that this Code cover the following areas:
- when the consultation should start
- who the consultation should cover
- who should be consulted
- what should be discussed
- how the consultation should be conducted
- when consultation can be considered complete
- conducting consultations in non-standard circumstances, and
- how to engage effectively with the Government and the benefits that this will bring
3. To improve Government guidance on collective redundancies
Finally, the Government plans to improve its guidance on collective redundancies to allow employers and employees to better understand how they can manage the wider implications of redundancy situations and engage Jobcentre plus at an early stage without undermining consultation. The Government intends to achieve this by including "strong examples of good consultation" and case studies in the guidance.
Comment
The headline proposal on reducing employee consultation periods in large-scale redundancies will be welcomed by employers. However, the nature of many of these proposals falls short of decisive reform, in that they involve guidance and codes of practice, rather than legislative change.
The consultation closes on 19 September 2012, with the Government aiming to introduce the changes in the spring of 2013.
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