Government Announces Collective Redundancy Consultation Changes

EU Directive 98/59/EC, the Collective Redundancies Directive, was enacted into UK domestic law by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Whilst the Directive requires a minimum consultation period of only 30 days for redundancies of 100 or more employees, under TULRCA, where an employer is proposing to dismiss 100 or more employees, the consultation period must be at least 90 days; otherwise it must be at least 30 days.

In June 2012, as part of its review aimed at streamlining employment law and establishing conditions that will ensure a flexible labour market, the Government consulted on plans to reform the legislation on collective redundancies. The consultation included a proposed reduction in the 90-day consultation period for redundancies of 100 or more employees and sought views on the impact on businesses of replacing it with a minimum consultation period of either 30 or 45 days.

In the light of this, the Government has now announced its intention to:

• reduce the 90-day minimum period, before large-scale redundancies can take place, to 45 days;
• legislate to make it clear that fixed-term contracts that have reached the end of      their natural life are excluded from obligations for collective redundancies consultation; and
• introduce new non-statutory Acas guidance to address a number of key issues      affecting collective redundancies consultation.

Commenting on the decision to reduce the consultation period where the employer proposes to make redundant 100 or more employees, Employment Relations Minister Jo Swinson said, “The process is usually completed well within the existing 90-day minimum 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.”

Draft regulations will be laid in the New Year and the changes are expected to be made by 6 April 2013.