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Government Confirms Plans To Halve Collective Redundancy Consultation Periods

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GOVERNMENT REDUNDANCY CONSULTATION
Government changes to consultation periods for mass redundancies have been greeted with a mixed reaction | Alamy

The government has confirmed it is seeking to halve the redundancy consultation period for large-scale redundancies from 90 days to 45.

Employment relations minister Jo Swinson - a Liberal Democrat - said in a statement that some of the laws needed reforming to "respond to an ever changing employment landscape".

"We want to improve the quality of consultations by making sure there are tools available to help employers manage this process fairly and successfully to deliver the best possible outcomes for all parties," said Swinson.

"The Advisory, Conciliation and Arbitration Service (Acas) will be working with stakeholders to produce non-statutory guidance that will be designed to help improve the quality of consultations. We have listened to stakeholders and there is a strong argument for shortening the minimum period, which is backed up by hard evidence.

“Our reforms will strike an appropriate balance between making sure employees are engaged in decisions about their future and allowing employers greater certainty and flexibility to take necessary steps to restructure."

The legislation will also introduce the new, non-statutory Acas guidance to address a number of key issues affecting collective redundancies consultation, and ensure that fixed-term contracts, which have reached the end of their natural life, are excluded from obligations for collective redundancies consultation.

The Huffington Post UK understands Acas guidance will be out in mid-January, 2013.

The decision to cut the length of time for mass redundancy consultations was first mooted in the Beecroft report; a document put together for the government by venture capitalist Lord Adrian Beecroft. Under Beecroft's proposals, redundancy periods should be cut to 30 days, regardless of the number of staff affected.

The government has repeatedly come under fire for appearing to favour a culture that makes it easier to fire people during one of the deepest recessions on record.

And under these proposals, staff facing redundancy could be left with less of a payout, according to Jonathan Chamberlin, partner at law firm Wragge and Co, as a longer consultation period often leads to improved pay-offs.

"In practice, this will lead to a reduction in cash compensation for staff facing redundancy. After the initial shock, the employee wants to know two things - when can I leave, and how much can I get," he explained.

"The employee representatives will then use the length of consultation as a bargaining chip to secure a higher redundancy payment."

Business reaction

The Confederation for British Industries welcomed the move, saying: "A shorter consultation period will reduce uncertainty for staff and allow businesses to focus on the future more quickly".

And the Chartered Institute of Personnel and Development (CIPD) said it supported the cut for all redundancies affecting 20 or more employees.

Mike Emmott, employee relations adviser at the CIPD, told the Huffington Post UK his members believe a three-month consultation period can drag out the process "to no real benefit" and can be unhelpful both for the business and for the employees affected.

“We do not believe that a shorter minimum time period will necessarily have a detrimental effect on either the quality of consultation or the impact on employees," he added.

"Indeed, employees may sometimes prefer a shorter period of consultation when it is clear that redundancies cannot be avoided, as this may help to minimise periods of uncertainty surrounding their future, whether within or outside the organisation."

Emmott added the decision to retain a longer consultation, rather than moving to 30 days for all redundancies, was a "missed opportunity" as it would have helped to simplify employment legislation.

The government's statement was also unclear about whether more clarity would be offered on guidance for consultations, but practical advice on how to choose employee representatives for example, would be welcomed by Wragge's Chamberlin.

"There are also some issues the government seems to have ducked, such as the issue around the location of employees,' he continued.

"If you're making a number of staff redundant, but you plan to make only a few redundant per location an employment lawyer will say that means they should be treated as individual businesses, and therefore the shorter consultation period applies. This is legal, but may not be seen as fair."

David Widdowson, partner at Abbiss Cadres, agreed clarity would be helpful, but suggested the decision to leave how to describe an "establishment" for redundancy purposes to Acas was probably taken to avoid infringing on EU law.

"I would imagine they don't want to introduce UK legislation in case it falls foul of the EU law. If we were to legislate on what we in the UK thought an establishment meant, and it wasn't the same as in the EU courts, it could become difficult and potentially embarrassing."

And Geoffrey Mead, partner at law at firm Eversheds, said the proposals were "good news for business".

"However, unclear and, sometimes, conflicting case law exists which is adding confusion and potentially leading to costly litigation and delays to business decision-making. As a result, Acas will face a challenging task if it is to succeed in providing meaningful and authoritative guidance in this area; one that many will hope it can achieve."

Unions react angrily

Understandably, the news has gone down badly with unions. The Trade Union Congress's general secretary Brendan Barber said in a press release that the reforms were "the last thing we need".

"Unemployment has not gone as high as many feared because employers have worked with unions to save jobs, even if it has meant sharing round fewer hours and less work. The need to consult unions has made an important contribution to that, and also given staff, many of whom will have had years of loyal service, time to think through their options," he said.

"These measures will not create a single extra job. The idea that an employer will change their mind about taking someone on because the statutory redundancy consultation period has been reduced from 90 to 45 days is close to absurd."

Len McCluskey, Unite's general secretary, criticised the move as "one of the most regressive, anti-job measures ever taken by any government".

Speaking to Huff Post UK, McCluskey said: "To be taken in the depths of this financial crisis, when the economy faces a triple-dip recession is utter madness. Scything back the consultation period for larger scale redundancies, from 90 days to 45 days, is akin to hanging a massive 'exit here' notice across Britain's businesses.

"Sneaking this out at the end of the year just underlines how underhand this government is. We will oppose this measure and every other attempt to attack workers' rights, which are already some of the most lax in Europe. This is nothing more than a desperate effort to pander to big business, paid for by the sacrifice of hard won rights of working people. Vince Cable should hang his head in shame."

And the Public and Commercial Services union general secretary Mark Serwotka, said: "While handing tax breaks to millionaires, this Tory-led government has announced policy after policy designed to make it easier and quicker to throw ordinary people out of work, and then ministers seek to blame them for being unemployed."

Impact on young people?

Felix Mitchell, co-founder of Instant Impact, a start up founded by two Cambridge graduates in 2010 that provides students and recent graduates from the UK's top universities with paid internships and jobs, said the proposals would not help young workers find work.

"While (minister Jo) Swanson said the move would help workers, it's difficult to see where the prospective benefit would be. Young people feel unemployment most acutely, with graduates struggling to find work. Reducing redundancies from 90 to 45 days will make no difference to that target. They are not on contracts where these measures would apply," he told Huff Post UK.

"Today, the job market is very fluid and the cut reflects the diverse careers of the average Brit. However, job security in difficult economic times is being sacrificed."

 
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