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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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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