The Government has revealed that it intends to reduce the minimum consultation period before large-scale redundancies can take place from 90 to 45 days. The change forms part of a suite of reforms published in the Government’s response to the consultation on changes to the collective redundancy consultation rules. Jo Swinson, Minister for Employment Relations, stated that the reduction in the consultation period will “allow businesses to restructure more effectively, and give them flexibility to respond to changing market conditions” while ensuring that “employee uncertainty is not unnecessarily prolonged.”
Reducing the consultation period
The requirement for businesses to consult before making redundancies originates in Europe, with Council Directive 98/59 providing that at least 30 days must be set aside to consult with employees. However, the UK has ‘gold plated’ the EU legislation, providing that where 100 or more jobs are at risk of redundancy, the consultation period must last at least 90 days.
As part of the Government’s commitment to review employment law, it launched a consultation on the collective redundancy provisions set out in the Trade Union and Labour Relations (Consolidation) Act 1992. The consultation, which closed on 19 September 2012, sought views on whether there should be a 30 day consultation period for all collective redundancies or 45 days for planned redundancies of 100 or more employees. Despite the majority of respondents favouring the former option, the Government has opted to look at reducing the period to 45 days.
As part of the reform, ACAS has agreed to produce non-statutory guidance which seeks to help employers engaged in one of these collective consultation processes. The guidance is expected to cover the following key areas:
- when consultation should begin;
- who the consultation should cover;
- who should be consulted;
- what should be discussed;
- how the consultation should be conducted; and
- when the consultation can be considered complete.
Fixed term contracts
The Government also plans to exclude fixed-term contracts which have reached the end of their agreed term from collective redundancy consultation. We consider that this proposal is likely to be welcomed by the education sector, which relies heavily on fixed-term contracts.
What happens next?
The changes are expected to come into force by 6th April 2013. However, it is worth noting that regardless of the minimum consultation period, employers will still have a duty to begin any collective redundancy consultation “in good time” to ensure that the consultation is “meaningful”. This will perhaps remain a bigger challenge for employers facing financial difficulties.