Currently employers are required to consult for 90 days where they propose to make more than 100 employees redundant in any one establishment, but the Government is proposing to cut this down to 30 or 45 days. Employers have to consult for 30 days where they propose to make between 20 and 99 redundancies.
The aim of the proposal is said to be to make the process of consulting with employees more flexible.
Employment Relations Minister Norman Lamb said that the current system was clearly “not working in the best interests of either staff or managers”. The Government feels that the current system is confusing and leads to bad quality consultation. Such a lengthy consultation period can also lead to fear and uncertainty amongst the workforce, and result in the best employees moving on even if it was unlikely that they would ultimately be made redundant.
In addition to cutting the consultation period, the Government is also considering introducing a Code of Practice which it believes would improve the quality of communications between employers and employees by giving guidance on issues such as:
- When consultation should start
- Who should be consulted
- What should be discussed
- How consultation should be handled
Despite the fact that the issue of what is an ‘establishment’ for the purposes of collective consultation is a thorny one for employers who are often challenged by trade unions as to their decision on what will be treated as an establishment for the purposes of collective consultation, the Government do not intend to give it a legal definition. It is anticipated that the Code of Practice would however provide guidance.
Although the Government is considering reducing the period for collective consultation, there are no plans to reduce the penalty for employers who get it wrong and the protective award will remain the same – a maximum of 90 days pay per employee. The Government has confirmed that this is because the level of a protective award is linked to an employers attempts to comply, not the length of the consultation period.
Employers will no doubt welcome proposals which will reduce complexity and uncertainty. The proposals could also lead to a significant saving for employers in terms of compliance costs if the consultation period is reduced – for example costs of salary in complying with the consultation period would be halved if it was reduced to 45 days.
Bhayani Bracewell are employment law solicitors based in Sheffield and Doncaster.
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