The Government has confirmed its intention to change the way employers consult workforce representatives during large-scale redundancies, including by reducing the 90 day consultation period to 45 days. The changes will come into force in April 2013.
Some employers will welcome this as usually consultation is completed well within the 90 days with the current law preventing the business from re-structuring sooner. The TUC however had said the government is making it easier to sack people.
Currently, an employer is required to inform and consult with trade union or other elected employee representatives where it is proposing to make 20 or more employees at one establishment redundant within a period of 90 days or less. Consultation must begin no later than 30 days, where between 20 and 99 redundancies are proposed, or 90 days, where 100 or more redundancies are proposed, before the first dismissal takes effect.
Fixed-term contracts will be excluded from collective redundancy consultation. Fixed term contracts and their expiry cause particular problems for the education sector, and mean that many education institutions engage in rolling consultation processes in order to comply with the current consultation obligations. This step is intended to alleviate those problems.
ACAS will produce non-statutory guidance to address key contentious issues in the consultation process.
Employers have the legal obligation to begin consultation “in good time” and to ensure it is meaningful.
The recent case where ex-Woolworths staff received a whopping £67m compensation payout at an employment tribunal demonstrates the importance of consultation in a redundancy process. In this case the administrators failed to consult the shop workers union on the redundancies and instead focused on trying to find a buyer.
The tribunal found the administrators of Woolworths had failed in their legal duty to consult the union with the result that over 24,000 former employees received a Protective Award of 60 days’ pay, capped at the statutory maximum of £330 a week that applied at the time. It had been the view of the administrators that closures were inevitable therefore there was no genuine open minded consultation. Also the time allocated to consultation meetings was far too short which also demonstrated their opinion that redundancies were inevitable.
The judgement sends a clear message to employers for the price paid for failing to consult properly. It is really important to carry out a fair and reasonable consultation process in good time before any dismissals take place. A group consultation should announce the company’s proposals then be followed by individual consultation meetings. When carrying out a collective consultation process with unions or employee representatives individual consultation needs to take place as well.
During individual consultation employees need to know the selection criteria applied and how they have been scored and at the same time be given the opportunity to discuss ways to avoid redundancy. They should be gven the opportunity to suggest ways of avoiding redundancy. The employer may have alternative employment opportunities available in the company which should be discussed with the employee explaining how the roles can be applied for. Employees need to fully understand the redundancy process and it should not be rushed at all.
Employers should keep a paper trail to show that full and meaningful consultation has taken place, which includes letters and notes from all the meetings.