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Redundancy consultation period due to be halved to 45 days from 6 April 2013

01 March 2013 #Employment


It is expected that on 6 April 2013 the following changes will come into force.

  • When there are 100 or more redundancies the current 90 day minimum consultation period before the first redundancy can take effect will be reduced to 45 days.
  • The expiry of fixed term contracts are to be excluded from the scope of collective redundancy consultation
  • New ACAS guidance is to be published on other aspects of collective redundancy consultation.

Implications

Reduction in consultation period to 45 days when 100 or more redundancies

Following consultation the government has decided that the 90 days consultation period is not usually required. Reducing the minimum consultation period from 90 days to 45 days will enable employers to be more flexible and aid them by saving administrative and salary costs. It was seen to be important to allow employers to restructure more quickly especially at a time when the future of the company could be at risk.

Despite union objections that the 90 day notice period was required to help employees prepare for the impact of redundancy the government feels this is countered by the need to reduce the period of uncertainty on the employee and reduce the risk to morale and productivity.

The government was keen to stress that the 45 day consultation period is a minimum and employers should take longer if required.

Calls to reduce this consultation period to 30 days and thus end the discrepancy with redundancies of 20 and over up to 100 were rejected due to the risk of employers who do treat the minimum as the maximum period they would consult. However the government has said that they will monitor the impact of these changes and so a further reduction by the remaining 15 days cannot be ruled out (or even possibly an increase from 45 days).

There is a possibility that this change may see a spate of redundancy consultations involving more than 100 employees, starting on and after 6 April 2012 as this is when the reduced consultation period is to due to come into force. However it is possible to see some scope for dispute as to whether the proposal actually started before or after this date. Especially as the United States of America v Nolan. Court of Appeal, 2010 EWCA Civ 1223. case has shown there is conflicting guidance at National and European level concerning when the obligation to consult actually starts.

Protective awards remain at 90 days maximum

It may appear initially odd that the protective award for failure to consult will remain at 90 days maximum per employee. However the level of this award is linked not to the length of consultation but the employer’s efforts to comply and the 90 day maximum award (which can be reduced at the Tribunal’s discretion) is seen as an appropriate penalty to dissuade employers.

Fixed-term employees

It is intended that the legislation will end the current uncertainty of whether employees whose fixed term contracts are due to expire should be included in collective redundancy. Although the EAT had given guidance on this University of Stirling v University and College Union [2012] IRLR 266 case law is subject to change. Now though employees on fixed term contracts “which have reached their agreed termination point” will be expressly excluded. To qualify for the exemption the fixed-term contract must have a clear termination date.  

The exemption would not apply where the employer is considering early termination of a fixed term contract as a result of redundancy.

New ACAS non-statutory code of practice on redundancy

ACAS’ new non statutory code of practice is expected to address the principles and behaviours behind good quality consultation and how to deal with the most difficult issues. It was feared that a statutory code would become a “tick-box” exercise and the number of issues was considered too wide to be prescribed.

The code should address the key issues identified in consultation

  • When consultation should start.
  • What the consultation should cover.
  • Who should be consulted.
  • What should be discussed.
  • How the consultation should be conducted.
  • When consultation can be considered to be complete.
  • Conducting consultations in non-standard circumstances.

The definition of what constitutes an “establishment” is also seen as being too difficult to define in legislation and is to be addressed in this guidance. It is to explain how the following factors might impact on the definition of “establishment”:

  • Geographical location.
  • Management structure.
  • Management or financial autonomy.
  • Cohesion of the workforce.
  • Nature of the work undertaken or type of service provided.
  • Contractual relationship between employer and employee; and
  • Level within the company at which the decision to dismiss is taken.

The government hopes that the “establishment” question and its effect on how many employees are to be made redundant will be less critical now that the difference in consultation period has been reduced to only 15 days.

Kenny Fyfe
Carillion Advice Services

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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