Minimum Consultation Period for Collective Redundancies Reduced

The Government has announced this week that the current 90-day minimum consultation period where employers are proposing to make 100 or more redundancies at one establishment will be reduced to 45 days.

Employers had previously called for the minimum period to be reduced to 30 days to allow greater flexibility and efficiency when carrying out restructuring exercises. However, this was rejected by the Government, amid concerns that less responsible employers would treat the consultation period as a maximum, rather than a minimum, as well as acknowledging the trade unions’ view that longer consultation periods allow affected employees more time to find alternative work whilst still receiving pay.

The Government did not propose to introduce a definition of “establishment”, which has been problematic for employers in the past, but confirmed that it would be addressed in non-statutory ACAS guidance.

The proposed changes also take into account the uncertainty that currently exists over whether fixed-term contracts which have expired trigger a requirement to conduct collective redundancy consultation. The Employment Appeal Tribunal recently decided that, unless employees dismissed on the expiry of their fixed term contract would have been retained but for the redundancy situation, such employees would not be dismissed as “redundant”. The Government appears to have incorporated this decision into its proposal, and indeed taken it further, by confirming that fixed-term contracts which have reached their agreed termination point will be excluded from collective redundancy consultation obligations, provided that the contract has a clear termination point and the employer is not considering early termination of the contract as a result of redundancy.

It is intended that the amended legislation, and accompanying guidance, will be in place to take effect from 6 April 2013.