Change to Collective Redundancy in the offing

The Government has launched a consultation to consider changes to the rules on collective redundancies.

The proposals include:

• a new non statutory code of practice
• a reduction in the length of the consultation period for collective redundancies from 90 days to either 30 days for all collective redundancies or 45 days for planned redundancies of 100 staff or more.

The consultation closes on the 19 September 2012 and the government is expected to publish its response by the end of the year. The proposals will also bring the UK consultation process back in line with the much less restrictive rules in other EU countries.

The reform comes as the government believes the current process under the Trade Union and Labour Relations (Consolidation) Act 1992, of 30 days where 20 to 99 redundancies are proposed and 90 days where 100 or more redundancies are proposed is too restrictive, does not correspond to today’s economic climate and prevents businesses from restructuring as efficiently as possible.

For employers the benefit of the new proposals is that it will allow employers to use
the new consultation process to expedite restructuring, therefore enabling employers to respond faster to commercial pressures. It could also save employers money in administrative and salary costs.

The new proposed statutory code will set out clear guidance in relation to the following:

• when the consultation should start
• which employees the consultation should cover
• which employees should be consulted
• what employers should discuss during the consultation process
• how the consultation should be conducted by employers
• when the consultation can be considered closed

What is notably omitted from the new proposals is a reduction of the maximum protective award, which is at present 90 days pay per person. This is likely to stay in force as a measure to ensure compliance. Indeed the Tribunals are not afraid to give out the award, as we saw in January 2012 where shopworkers union UDSAW won £67m compensation for more than 24,000 former Woolworths workers made redundant when the retailer collapsed at the end of 2008.
A response to the consultation is expected as soon as possible but no later than three months after the closing date. If the new proposals gain support the Government may introduce these changes in 2013.

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This entry was posted in Devonshires, employment, employment law, UK employment and tagged , , , , , , , , , . Bookmark the permalink.

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