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3 July 2012

Proposed changes to redundancy consultation

The Government has published a new consultation paper on its proposals to reduce the minimum periods of time for collective redundancy consultation exercises.

Under current legislation, employers are required to collectively consult with employees for minimum periods of time in advance of redundancy dismissals taking place.  These minimum periods are 30 days, if it is proposed to dismiss 20 or more employees at one establishment; 90 days if it is proposed to dismiss 100 or more employees.

The new consultation follows the Government’s ‘Call for Evidence’ issued in November 2011, which sought to establish the impact of the current rules on businesses.  According to the consultation paper, information gathered as a result of the Call for Evidence suggested that the current collective redundancy consultation regime is unsuitable for the UK labour market, with the legislation being too restrictive and government guidance not clear enough.

The consultation is proposing a reduction in the period of time for large scale (100+) redundancies from 90 days to either 45 or 30 days. It is not, however, proposing a corresponding reduction to the level of protective award payable by employers, which is currently up to 90 days’ pay per employee in the event that an employer fails to properly consult.

The Government will issue a new, non-statutory, Code of Practice to assist employers to carry out a good quality consultation process.  This will include guidance on the meaning of ‘establishment’ for the purpose of determining the thresholds for consultation.  It is also proposing to improve guidance for employers and employees on the support available.

The consultation on these proposals will close on 19 September 2012.  It is intended to bring the changes into force in spring 2013.

A copy of the consultation is available here