The Government has announced its intended changes to the collective redundancy consultation process.

In circumstances where 100 or more employees are due to be made redundant from one establishment within a period of 90 days or less, the Government plans to reduce the minimum consultation period from the current 90 days to 45 days.

The current 30 day period for consultation where 20 or more employees but less than 100 employees are being made redundant from one establishment within a period of 90 days or less remains unchanged.

Alongside this announcement the Government has stated that it intends to produce new Acas guidance on collective redundancies. It also plans to legislate to ensure that fixed term contracts, which have reached their expiration point, are excluded from consultation.

The fixed term contract point arose from cases in the past couple of years relating to this point including:-

University of Stirling v University and College Union

Lancaster University v The University & College Union

Regulations to effect these changes are expected to come into force by 6 April 2013.

For more information see the BIS press release on this, and the Government's consultation response.

One point to always bear in mind is that volunteers for redundancy count towards the number of employees being made redundant. I am aware of at least one reported case where an employer thought that they were only making 17 employees redundant and were under the impression that the collective redundancy obligations did not apply. However, there were 3 or 4 volunteers for redundancy which meant that the collective redundancy process should have been triggered.

Finally, remember that the main consequences of a collective redundancy situation are:-

  1. first dismissal cannot take effect until after the statutory consultation period has expired;
  2. employer must provide certain information to the employee representatives (trade union representatives and/or elected employee representatives);
  3. employer must consult with employee representatives;
  4. employer must notify BIS (Department for Business, Innovation & Skills).

Failure to notify BIS is a criminal offence.

Failure to collectively consult can result of an award of up to 90 days' gross pay (n.b. the cap of £430 for a week's pay does NOT apply) per affected employee. This can be very expensive for employers if there are a lot of affected employees (and there will, in any event, be at least 20 affected employees).