The Government has published its response to its consultation earlier this year on the collective redundancy rules and announced changes which it expects will take effect from 6 April 2013.

Currently, where an employer is proposing to dismiss as redundant 20 or more employees who work at one "establishment" within a period of 90 days or less, consultation with representatives of the affected employees must begin "in good time" and in any event at least 30 days before the first dismissal takes effect.  If the proposal is to dismiss 100 or more employees at one establishment within a 90 day period, consultation with appropriate representatives must begin at least 90 days before the first dismissal takes effect.

The Government announced yesterday that:

  • for collective redundancy consultation exercises involving 100 or more employees, it intends to reduce the minimum period before redundancies can take effect from 90 to 45 days.  The minimum period before redundancies can take effect for exercises involving 20 to 99 employees will remain at 30 days;
  • ACAS has been asked to develop a non-statutory code of practice on collective redundancy consultation to "address the principles and behaviours behind a good quality consultation"and include guidance on how to define "establishment". It is envisaged that the guidance on the meaning of "establishment" will include reference to geographical location, management structure, cohesion of the workforce, nature of the work undertaken/service provided and the contractual relationship between employer and employee; and
  • fixed term contracts which have reached their agreed termination point are to be specifically excluded from collective redundancy consultation obligations provided that the contract has a clear termination point.  The exemption would not apply where the employer is considering early termination of the contract as a result of redundancy.

The Government has said it considers that the changes will provide greater flexibility to employers to allow faster restructuring and administrative and salary savings, whilst providing redundant employees with greater certainty and protecting the morale and productivity of those who remain.

Practical advice

  • The Government has emphasised that the 45 day period is the minimum period during which employers should collectively consult and that employers will be encouraged to extend consultation beyond this period where necessary.
  • The Government has stated that it will review the operation and impact of the shorter statutory consultation period on the labour market once it has had time to gauge its effect. The period could therefore be increased or further reduced to 30 days.
  • The Government's response can be viewed here.  We will continue to keep you updated on further relevant developments.