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19 December 2012

Collective redundancy consultation

The minimum period required for collective consultation in a large-scale collective redundancy exercise will be reduced, with effect from April 2013.

Earlier this year, the Government consulted over its plans to reduce the minimum consultation periods currently required for collective redundancies .

The Government has now issued its response to the consultation, confirming that the minimum period of consultation required for redundancies affecting 100 or more employees at a single establishment will be reduced from 90 to 45 days.  This is intended to allow businesses to restructure more effectively and to give them the flexibility to respond to changing market conditions. The minimum period of consultation in redundancies affecting between 20 and 99 employees will remain at 30 days.  The penalty for failing to properly consult under the collective consultation rules (a protective award) will remain at a maximum of 90 days’ actual pay per employee.

The Government has confirmed that it has asked ACAS to prepare new guidance on collective redundancy consultations, including guidance on what is meant by an ‘establishment’ for the purposes of the collective consultation requirements.

In addition, the legislation will be amended to exclude the expiry of fixed-term contracts from the obligation to collectively consult.  This exemption will not apply when there is a proposal to terminate a fixed term contract early as a result of redundancy.

It is important to bear in mind that the minimum periods for collective consultation are only minimums.  If effective consultation cannot be completed during this period, it will be necessary for the consultation period to be extended. 

In addition, the minimum periods for consultation should not be confused with the need to give employees notice of termination.  Employees who are being made redundant will still be entitled to their contractual (or statutory) notice, which can only be issued once the consultation has concluded. 

Under the current rules, European case law supports the view that notice of termination can be issued within the period of 90 days, provided the consultation has been fully completed and provided the notice expires after the minimum 90 day period.  It seems likely that this will still be the case under the revised rules, although it is much less likely that an employer can legitimately claim that proper consultation has been completed within a 45 day period.

The Government intends the amended legislation and accompanying ACAS guidance to be in place from 6 April 2013.

A copy of the Government’s consultation response with further details of the proposals is available here.

For any employment enquiries please contact the Steeles Law employment team on employment@steeleslaw.co.uk or 01603 598000.