Stuart Craig looks at the implications of the changes that took effect on 6 April and the new ACAS code of practice
Two key changes
The most significant change is the halving of the minimum consultation period for large-scale redundancies. So, when proposing 100 or more redundancies over a 90 day period at one establishment, the minimum consultation period has been reduced from 90 to 45 days. The shorter consultation period, which applies when proposing 20 or more but fewer than 100 redundancies, remains at 30 days. There has been no corresponding reduction in the maximum protective award, which remains at 90 days’ pay, whenever the obligation to consult is triggered and regardless of the length of the minimum consultation period.
The other change addresses the position of fixed-term workers. There has been uncertainty about whether workers whose fixed-term contracts expire during the 90 day period should be included in the headcount for collective consultation purposes. That in turn depends on whether an employer who lets an employee’s fixed-term contract expire can be regarded as proposing to dismiss that person as redundant. The amendments effective on 6 April resolve this issue by stating clearly that the collective consultation requirements do not apply in relation to fixed-term employees unless the employer is planning to dismiss them on redundancy grounds before the expiry of their contract.
These changes have been complemented by a new non-statutory code of practice on managing collective redundancies which has been put together by ACAS. As well as exploring the key legal requirements, it sets these in context with the use of time lines and case studies.
Two partly unresolved questions
The Government has resisted calls to introduce a statutory definition of establishment for collective redundancy purposes. The Government has decided that a “one size fits all” definition is not possible, since determining an establishment depends on a number of factors which will vary significantly from case to case. It has however distilled a range of factors from the case law which are likely to be relevant, including geographical location, management structure and the level within the organisation at which the decision to dismiss is taken.
The new ACAS code approaches things rather differently, focusing on the unit to which the workers are assigned and assessing whether it can be regarded as distinct in its own right. However it concludes by observing: “This is a complex area, and if you are in doubt you may want to seek legal advice.”
Another unresolved area of uncertainty surrounds the precise time at which the consultation should begin. The stipulated minimum consultation period is of course just a starting point. The legislation expresses an overriding requirement for the consultation to start “in good time”. But what does that mean? The Government admits that recent case law guidance is “useful but not entirely clear”, but it has ruled out legislation to provide further clarification.
For employers, the pragmatic advice remains to consult as early as possible when making decisions that could lead to collective redundancies. This will normally involve a careful balance between commercial realities, the demands of good industrial relations, and the risk of exposure to a protective award.