The UK government has published details of changes to the rules on collective redundancy consultation which will take effect from April 2013. The changes will have significant implications for employers implementing collective redundancy programs in the UK.
The changes to the current rules are set out in the government's response to the consultation on this issue which closed in September 2012. The key changes are:
- The current 90 day minimum consultation period which applies where 100 or more employees are to be made redundant from one "establishment", (see further below), within a period of 90 days or less, will be reduced to 45 days.
Calls largely by employers for this period to be reduced further to 30 days, such that only 1 minimum period would have applied once the number of potential redundancies reached 20, were rejected by the government. In the response document, the government states that it recognized the level of concern expressed by some respondents to the consultation that "less responsible" employers will treat the time period as a maximum period not a minimum. The government also states that to reduce the period to 30 days would have been to "send a signal" that it was placing less weight on the importance of consultation.
The protective award for failure to comply with the collective consultation obligations will not, however, be reduced, and will remain at a maximum of 90 days' pay. The government believes that this is a "proportionate" and "dissuasive" penalty.
ACAS is to draw up non-statutory guidance on how collective redundancy consultation exercises should be conducted. The guidance is likely to cover issues such as:
- when consultation should start;
- who the consultation should cover;
- who should be consulted;
- what should be discussed;
- how the consultation should be conducted; and
- when consultation can be considered to be completed.
Importantly, the guidance will also cover the issue of what constitutes an "establishment" for collective consultation purposes, an issue that can sometimes cause difficulties in practice.
Rejecting the idea that there should be a statutory definition of "establishment", instead, the government indicates that the guidance will include a list of factors which it believes will be useful in helping employers and employee representatives reach an "informed decision". The factors are likely to include:
- geographical location;
- management structure;
- management and financial autonomy;
- cohesion of the workforce;
- nature of the work undertaken or type of service provided;
- contractual relationship between employer and employee; and
- level within the company at which the decision to dismiss is taken.
The ACAS guidance is expected shortly.
- Fixed term contracts will be excluded from the collective consultation rules. The exclusion will only apply however where the contract has a clear termination point and has reached the end of its "natural life". An employer who, for example, considers early termination of the contract by reason of redundancy, would not be able to exclude the fixed term contract when calculating whether the number of employees had reached the threshold for collective consultation purposes.
The government has said that it intends to implement the amended legislation and accompanying ACAS guidance with effect from 6 April 2013.
Click HERE for a link to the government's response document, ("Collective redundancies: government response to consultation on changes to the rules, December 2012").