Collective Redundancies – Consultation on changes to the rules (BIS)
Collective Redundancies – the current regime
Like all other EU Member States the UK is covered by the Collective Redundancies Directive (Directive 98/59 – “The Directive”)). The aim of the Directive is to provide protection for employees in large-scale redundancies, but without preventing employers from taking necessary steps to restructure. It requires that all employers consult with representatives of their employees when large-scale redundancies are planned. The Directive is implemented through sections 188-198 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). TULRCA requires that, where an employer is proposing to dismiss as redundant 20 or more employees at a establishment in a 90-day period, the employer must consult with representatives of their employees (trade unions where they are present) about the redundancies.
The consultation must begin in good time, be conducted with a view to reaching agreement and must cover, at least, ways of:
- avoiding the dismissals;
- reducing the numbers of employees to be dismissed; and
- mitigating the consequences of the dismissals.
TULRCA requires that no redundancy can take effect until at least:
- 30 days after the start of consultation where between 20 and 99 redundancies are proposed; or
- 90 days after the start of consultation where 100 or more redundancies are proposed.
In accordance with the Directive, the employer must also notify the Secretary of State for Business, Innovation and Skills (BIS) of the proposed redundancies to the same timescale – to allow the Government to coordinate the work of its agencies to offer assistance to both the employer and the affected employees.
The Directive requires that notification to the Government takes place at least 30 days before redundancies take effect.
BIS have published a new consultation document entitled “Collective Redundancies – Consultation on changes to the rules (BIS)”
Within the Consultation the government is keen to point out that the obligation to consult has been in place largely unchanged since 1975, and that the working environment has evolved.
“Business has become more global and, as a result, markets have become more competitive. This means business change is more frequent. The UK labour market has become more flexible. There are over 29 million people employed in the UK and millions of movements in a year between jobs, and between employment, unemployment and inactivity. There is less emphasis on career longevity with a single employer” .
Call for Evidence 2 – November 2011
The Government published a Call for Evidence2 in November 2011 which sought evidence on whether existing rules now present a barrier to employment flexibility in the labour market and can put future business success at risk.
The responses showed that employers and trade unions were at odds about the advantages and disadvantages of the 90-day minimum period. However, both were keen to see an improvement in the quality of consultation.
Conclusions from call for evidence
Employers were agreed that the current regime was affecting their competitiveness at both a domestic and global level. They stated that the current rules (and in particular the longer, 90-day period before redundancies could take effect) delayed their ability to respond to changing market conditions in a timely way. Their inability to restructure efficiently and effectively can make it difficult for employers to take advantage of new opportunities and so hamper growth.
Employers also highlighted the additional administrative and wage burden imposed by the current regime. This was particularly keenly felt in the retail, construction and higher-education sectors where the inclusion of the termination of fixed-term contracts in the count for collective redundancy consultation is a significant issue.
Respondents to the Call for Evidence identified a number of issues for employees. Chief amongst them was the impact on morale and productivity caused by the uncertainty of extended consultation periods.
The Call for Evidence also highlighted issues for employees’ representatives. The trade union view was that the current regime was vital for job protection and allowed them additional time to reduce the number of jobs lost. However, there were also calls from some employees’ representatives (chiefly trade unions) to go further. Specifically, they felt that the rules should not exclude those employees working at smaller establishments.
Government agencies have stated that there is often a lack of understanding among both employers and employees about the help available. They said that they would like to be involved in the process at an earlier stage, but that many employers were reluctant to contact them early, concerned about presenting the consultation as a fait accompli if they did so.
Aims of the Consultation
A straightforward legislative framework. The more complex the legislative process, the more likely that it distracts from the engagement between employer and employees’ representatives.
A positive relationship between the employer and employees’ representatives. Ongoing engagement and a positive working relationship between the employer and employees’ representatives are key to an effective consultation and to speeding up the process where appropriate.
Better mechanisms to allow appropriate Government engagement (e.g. Jobcentre Plus). Ensuring individuals and employers are aware of Government assistance that is available and ensuring that Government engagement is triggered early can help improve the prospects for individuals finding alternative employment and/or for businesses to ascertain whether there are other factors that might mitigate the need for redundancies.
Reducing the 90-day minimum period and replacing it with either a single 30-day period, or a shortened 45-day period, in order to simplify the legislative framework and remove disincentives to quality consultation;
Improved guidance to increase certainty about how to define an ‘establishment’ and treatment of fixed-term appointees;
A Code of Practice which will address a number of key issues around the processes that detract from quality consultation, seeking to facilitate a positive relationship between the employer and the employees’ representatives;
It is proposesd that the Code of Practice will cover areas including:
When consultation should start to allow employers to get the most from the process and to allow employees’ representatives an opportunity to put forward alternative proposals;
Who the consultation should cover. This will include consideration of the factors that could help employers and employees’ representatives decide what constitutes an establishment and whether fixed-term appointees should be included. It will also encourage employers not to break-up redundancies into smaller chunks to ensure that as many employees are represented as possible;
Who should be consulted, including identifying appropriate employees’ representatives and consulting at the most appropriate level of management;
What should be discussed, including whether this extends to the business decision behind the redundancies and the information that should be provided to employees’ representatives. This will attempt to explain the impact of the Akavan European Court of Justice (ECJ) case;
How the consultation should be conducted. This will focus strongly on the spirit of the consultation, ensuring that it is conducted with a view to reaching agreement and that parties are given sufficient time to consider and respond to alternative proposals;
When consultation can be considered to be complete; and
Conducting consultations in non-standard circumstances, including business transfers and insolvencies.
How to engage effectively with the Government and the benefits that this could bring
During 2011, 589,000 people were made redundant. Collective redundancy situations involving 100 or more employees typically result in about 75,000 redundancies per year.
Here is a link to the consulation and how you can get involved – http://www.bis.gov.uk/assets/biscore/employment-matters/docs/c/12-808-collective-redundancies-consultation.pdf
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