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Employment Law

Volume 546: debated on Thursday 21 June 2012

Today, as part of their ongoing review of employment law, the Government have launched a consultation on changes to the rules on collective redundancy. In the consultation we are seeking views on changes to both the legislative framework and the guidance on offer in order to create a regime that supports the labour market in Great Britain and promotes good quality consultation.

Evidence suggests that the current rules are too rigid and hamper employers’ ability to restructure effectively whilst drawing the focus of consultation toward the process and away from the most important issues, such as ways to mitigate the impact of the redundancies. The current minimum consultation period for large-scale redundancies is also much longer than most other EU countries. We want businesses to be able to react nimbly to changes in market conditions and to be confident about creating new employment opportunities.

We also want employers to consult their work force effectively over the big issues, including restructuring and redundancy. We do not want to create an uncaring, hire and fire culture; instead our aim is to promote good-quality consultation processes between employers and employees to ensure that the right decision is reached based on a full consideration of all relevant facts.

This consultation looks at how we can revitalise the process. We propose to reduce the 90-day minimum period before very large numbers of redundancies can take effect to either 45 or 30 days, alongside production of a new code of practice.

As well as these important proposals for change, there are some elements that we propose to leave as they are, most notably the protective award. The protective award currently stands at a maximum of 90 days’ pay for each employee affected by a failure to consult and is paid by the employer. As the level of the award is linked to the employer’s attempts to comply (and not to the length of the consultation period) we believe that this is right to keep this proportionate and dissuasive penalty.

The consultation will close (after 13 weeks) on 19 September 2012. During the consultation period we will seek views from a range of interested parties. Following consideration of the responses to the consultation, we will publish a Government response, setting out what we intend to take forward.

Copies of the consultation document have been placed in the Libraries of both Houses.