The Government is proposing to reduce the period for collective consultation when redundancies are contemplated. These changes could take effect as early as next year.
Currently, an employer is required to consult collectively, with either recognised trade unions or elected representatives, when it anticipates making 20 or more employees redundant within a 90 day period at one establishment.
The existing requirements for minimum periods of collective consultation are set out in the Trade Union and Labour Relations (Consolidation) Act 1992. Specifically, where between 20 and 99 employees are likely to be dismissed within 90 days of each other, the employer must consult collectively for at least 30 days before the first dismissal takes effect. That minimum consultation period is extended to at least 90 days, when the employer anticipates dismissing 100 or more employees within 90 days at one establishment.
Review and rationale
The Government has issued a consultation on collective redundancies, following its call for evidence which indicated that the current system needs reform. The Government states that the current rules do not fit today’s economic climate, slowing businesses’ ability to restructure.
The rules in many other EU countries are less restrictive, simply reflecting the minimum period stipulated in the EU Collective Redundancies Directive (No.98/59), which does not require “extra” consultation where 100 or more redundancies are anticipated. With increasingly competitive global markets, and given the advances in IT which make consultation easier and faster to carry out, the Government feels that a shorter consultation period would be more appropriate for employers. Arguably, it will also bring employees greater certainty, increase morale and better place them to take advantage of alternative job opportunities, all of which may offset any short-term negative impact of receiving less pay.
The Government proposes reducing the minimum consultation period, for redundancies of 100 or more, to either 30 or 45 days. There are no proposals to amend the period of collective consultation for anticipated redundancies of between 20 and 99 employees.
The Government also proposes publishing a non-statutory code of practice, to encourage best practice during consultation. The code would focus on challenging areas, such as the definition of “establishment”, the knotty issue of how employers should treat fixed-term workers in the context of collective redundancies and how to conduct consultations in non-standard circumstances (such as business transfers and insolvencies). Ideally, the code will therefore reduce the need for further legislation on these points.
It is expected that the new code will include details of:
- when consultation should start and at what point it can be treated as concluded;
- who should be consulted, as well as who the consultation should cover;
- which issues should be addressed as part of the consultation process; and
- how the consultation should be conducted.
The Government’s consultation closes on 19 September 2012, with its response due to be published before the end of the year. If the consultation supports change to the current rules, the Government will seek to introduce these changes in Spring 2013.