January 10, 2013

Employment e-Brief: Collective redundancy consultation: a half-way heaven?

The Government has announced that the minimum consultation period, where an employer is proposing to make 100 or more redundancies at one establishment, will be reduced from 90 to 45 days.  Given that trade unions were in favour of retaining the 90 day period and employers wanted a reduction to 30 days, it is not particularly surprising the Government has chosen this as a compromise position.

A minimum 30 day consultation period for all collective redundancies would have had the benefit of legal simplicity.  However, halving the period from 90 to 45 days will provide greater flexibility for businesses as well as reducing the financial burden of restructuring.

It is hoped that the change will result in more focussed and effective consultation between employers and employee representatives.  To this end, ACAS will prepare detailed guidance on when consultation should start, who the consultation should apply to, who should be consulted, how consultation should be conducted and when it can be considered complete.

In addition, the guidance will deal with the perplexing question of what counts as an establishment.  The factors which will be specifically addressed include; location, management structure, autonomy, cohesion of the workforce and the work undertaken or service provided.

The Government has confirmed it will pass legislation to remove the need for employers to collectively consult about the termination of fixed-term contracts which come to their natural end.  Fixed-term contracts which are terminated early will still trigger the collective redundancy consultation obligations.  This is welcome news for employers, particularly in the higher education sector.

No doubt the proposals will meet with approval from businesses and a degree of discontented grumbling from trade unions.  However, the Government appears to have taken a balanced and sensible approach when weighing up the differing views before arriving at these proposals.  It is a shame that the Government has paid less notice of responses to other recent consultations, the proposed introduction of employee-owners being a case in point.  Perhaps the Government has had some consultation training of its own from ACAS?

To discuss this e-Brief in more detail please contact a member of the employment team on 0113 227 0100.