Unions censure cut in consultation period for redundancies

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The statutory minimum period for consultation on redundancies affecting 100 or more employees has been reduced by the UK Government. The reduction was announced in December 2012, cutting consultation perods from 90 to 45 days. It was welcomed by employers’ groups as a change that would modernise the system, although some wanted a further reduction to 30 days. Unions opposed the move, saying that it would increase job insecurity among temporary staff.

Background

In December 2012, the UK Government confirmed that it intended to make changes to existing statutory provisions requiring consultation over redundancies. The principal change would be to reduce the current 90-day minimum consultation period to 45 days for large scale redundancies affecting more than 100 employees.

The move formed part of the government’s continuing review of employment law. Between 21 June and 19 September 2012, the government held public consultations about possible changes to several aspects of redundancy consultation legislation (UK1207019I).

The government canvassed opinion on two options for reducing the minimum consultation period for large scale redundancies to either 30 or 45 days. On 18 December, Ministers announced their response (352Kb PDF) to the public consultation.

Key changes

According to the results, ‘most employers’ favoured shortening the minimum consultation period for large-scale redundancies to 30 days, making it the same as the time allowed for consultation for between 20 and 99 redundancies.However, the government opted instead for 45 days, stating it had considered ‘all representations around this issue’ and did not wish to signal that it was ‘placing less weight on the importance of consultation’.

The government will also legislate to exclude fixed-term contracts which have reached termination from the redundancy consultation provisions, ‘in line with the exemption allowed for in the [EU] Directive’.

Announcing the government’s decision, Employment Relations Minister Jo Swinson said:

[Redundancy consultation] is usually completed well within the existing 90 day period, which can cause unnecessary delays for restructuring and make it difficult for those affected to get new jobs quickly. 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 government said it would:

...review the operation and the impact of the shorter statutory period on the labour market once we have had time to see its full effect.

It also asked the Advisory, Conciliation and Arbitration Service (Acas) to prepare new guidance on redundancy consultation. This will address ‘the principles and behaviours behind good quality consultation’. It will also include reference to organisational factors that may affect the scope of the term ‘establishment’, used by the existing legislation as the basis for determining whether the number of redundancies meet the statutory thresholds that trigger the obligation for consultation. In some recent cases, strict interpretation of the meaning of ‘establishment’ has produced different outcomes for similarly affected workers in the same company (UK1202019I).

The changes will be made through secondary legislation. Ministers will shortly lay draft regulations before the UK Parliament and the new arrangements are expected to take effect by 6 April 2013.

Social partners’ reactions

The changes announced by the government were welcomed by employers’ groups, but were strongly opposed by trade unions.

Neil Carberry, Director for Employment and Skills at the Confederation of British Industry (CBI) said:

The CBI has long called for a simplification and streamlining of the collective redundancy rules and today’s announcement is a welcome move in that direction. The priority for businesses is meaningful consultation. A shorter consultation period will reduce uncertainty for staff and allow businesses to focus on the future more quickly.

The manufacturers’ organisation, EEF, commented:

By reducing the consultation period from 90 to 45 days, the government has taken a further step towards creating a modern consultation system based on the quality, not the length, of the process.

However, trade unions accused the government of making it easier for employers to sack people. The Trades Union Congress (TUC) said the 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... is close to absurd.

TUC leaders argued that reducing the consultation period would give unions less time to work with employers to find ways to save jobs. They also said removing redundancy rights from fixed term contract staff would create more financial and job insecurity for temporary staff and reduce their chances of redeployment.

The University and College Union (UCU) said that excluding fixed term contracts from statutory redundancy consultation would be ‘another damaging blow’ for the post-16 education sector which had high numbers of staff on fixed term contracts and had already suffered funding cuts and job losses.

Mark Hall, IRRU, Warwick Business School, University of Warwick

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