THE BLOG

Shorter Consultation Period Means Businesses Can Act to Stay Competitive

05/04/2013 17:43 BST | Updated 05/06/2013 10:12 BST

The new, shorter consultation period for collective redundancies will free up businesses to make changes to their structure and this could help to prevent job losses in the long run.

From 6th April 2013, the minimum consultation period for collective redundancies affecting more than 100 employees will reduce from 90 to 45 days. As well as affecting collective redundancies, this shorter consultation period applies when businesses are making operational changes that impact on employees' terms and conditions, such as altering shift patterns.

This change is the first of a number of proposed employment law changes expected to take effect this year. As well as the new collective redundancy consultation period, the Government has already announced a cap on compensation awards and a new fee structure for unfair dismissal claims, which will be introduced in the summer.

Cumulatively, these new changes will give the employer much-needed flexibility, without compromising employees' rights.

Currently, the 90-day minimum consultation period for large-scale redundancies is stifling change at a time when businesses need to adapt to stay competitive and this could lead to more business failures in the long run.

For employees too, the 90-day minimum consultation period can sometimes be obstructive - preventing them from moving on quickly to a new position for fear of losing part of their redundancy payment.

Shorter consultation periods are in everyone's best interests. They will bring greater certainty for the employee and the employer will be able to introduce changes more quickly. In reality, 45 days is more than enough time to consider any alternatives which might avoid redundancy and the current 90-day period is excessive.

Other legal changes expected this year could help reduce the risk of employers getting drawn into costly and time-consuming Employment Tribunal claims. Proposed measures include reducing the cap on claims to one year's salary, with the overall limit remaining at £74,200. An upfront payment of £250 for any claim brought is also proposed along with £1,000 if a hearing is granted. Such measures could significantly reduce the number of spurious and vexatious claims.

The shorter time period allowed for employee consultation on large-scale redundancies and other significant business changes is a bold move that will boost business confidence at a critical time.

When combined with other legal changes coming in this year, it is clear that the Government is seeking to focus employment legislation changes to help businesses adapt in these ever challenging economic conditions.