Thank you to everyone who participated in our online survey on the Government’s Consultation on the current law regarding collective redundancies. We received responses from a diverse cross section of businesses with employee numbers ranging from 40 to 2,500. We have included the results of the survey, together with feedback from a variety of employers that we have spoken to in our formal response to the consultation.

Background

As set out in our previous article on the Government’s consultation, currently collective redundancy consultation must continue for at least 30 days where an employer proposes to dismiss 20-99 employees; and for at least 90 days where 100 or more dismissals are proposed, in either case at one “establishment”.

The Government is proposing to:

  • Reduce the 90-day minimum consultation period;
  • Issue a new, non-statutory, code of practice that will address the key issues affecting redundancy consultations; and
  • Provide improved guidance for employers and employees on the support on offer from government.

Key findings

  • The majority of respondents (74%) said that reducing the minimum consultation period is a good idea.
  • Most respondents (53%) thought that the minimum period should be 30 days for all redundancies. A smaller number (26%) thought that the minimum period should be 45 days for 100+ redundancies and 30 days for 20-99 redundancies. A minority (17%) thought that the law should not be changed.
  • 71% of respondents thought that reducing the minimum consultation period would bring more certainty for employers and 64% thought it would bring greater flexibility. 61% thought that the proposals would improve employee morale and make it easier for employers to implement changes.

Results and Commentary

Definition of “establishment”. Collective consultation obligations are triggered where an employer is proposing to dismiss 20 or more employees at one “establishment”. In line with the Government’s concerns, 50% of respondents consider the law to be unclear on what constitutes an establishment and 80% think that defining “establishment” in a code of practice would assist their understanding and make the position clearer. However, only 37% of respondents had experienced problems in determining what an establishment is in their particular organisation. Just over half of respondents said that they had not experienced this issue first hand. We understand that the Government now plans to produce guidance in association with ACAS on this issue rather than a non-statutory code of practice.  

Fixed term staff. The law is presently unclear on whether the non-renewal of fixed term contracts should be treated as dismissals for the purposes of collective consultation.  56% of respondents support the Government’s proposal to provide guidance to employers on how to treat fixed term employees in a code of practice/guidance rather than through legislation.

Protective award. Although the Government has not sought views on the current approach to protective awards, just over half of respondents are of the view that the maximum award of 90 days’ pay per employee for failure to consult is excessive. However, interestingly, 40% of respondents do not share that view.                  

Respondents’ experience of collective redundancy consultations. Our survey highlighted some interesting information regarding employers’ experiences of handling collective redundancies. Of those respondents who had been involved in a collective redundancy consultation in the last 5 years, the majority (71%) had consulted with fewer than 100 employees. The majority (68%) has also consulted with employees that did not have a recognised trade union, and most (62%) completed the consultation within 30 days, with smaller proportions taking 30-45 days (14%), 46-60 days (9%) or 90 days (14%).

In terms of the legal process, the vast majority of employers (91%) said that they understood when they needed to start consultation and most (77%) did not experience any issues in relation to the timing of issuing notices of dismissal. Similarly, only a minority of respondents with fixed term staff (24%) experienced issues over whether to include these staff in the consultation.

With regard to the effect that respondents thought the consultation process had on their business, the majority (63%) thought that it negatively affected their regular business.  This echoes the Government’s concern that the existing collective consultation regime is a barrier in the way of sustained economic growth as it impedes a business’s ability to expand and constrict quickly according to fast changing economic conditions.

Most respondents (59%) said that they would have found the consultation process easier if the minimum period for consultation had been shorter. Interestingly, nearly half (46%) of respondents said that they had settled one or more potential claims.

The consultation has now closed and so we await the Government’s response. We will of course report any developments on employment buddy.