Employment Law Expert Raises Doubts Over New Proposals

The Government’s proposals to change current regulations surrounding collective redundancy will not have the desired impact and are more likely to create much confusion around the issue, a leading employment law expert has warned.

In its response to the consultation on the issue, the Department for Business Innovation & Skills (BIS) has outlined plans including:

• For large scale redundancies (100+) the reduction of the minimum consultation period from 90 to 45 days.

• On the key and vexed question of what constitutes an “establishment”, the Government plans to leave the details to the proposed ACAS Guidance (below).

• An intention to legislate to ensure that workers on fixed-term contracts who have reached the agreed termination point are excluded from collective redundancy obligations as long as the termination is not actually for redundancy.

• The 20 employee threshold: in the face of strong TUC lobbying, the Government does not propose to reduce or remove this threshold.

• ACAS Guidance: the Government has rejected calls for a statutory Code of Practice, in favour of a new Guidance Note from ACAS covering a range of issues set out in the Response, including:

    o when consultation should start;
    o who the consultation should cover;
    o who should be consulted;
    o what should be discussed;
    o how the consultation should be conducted;
    o when consultation should be considered to be complete; and
    o how to engage effectively with the Government and the benefits that this could bring.

The proposals, put forward following a consultation designed to revamp the regime after it was deemed to have become restrictive and lacking in clarity, are expected to come into force with accompanying ACAS Guidance from April 6th 2013.

Tom Flanagan, National Head of Employment Law at Irwin Mitchell warned that there could be some significant misunderstanding over their potential impact and what it means for many businesses and employees.

He explained: “We have some concerns over these proposals. For instance, the suggestions do not appear to reflect the fact that the 90-day period is not actually a minimum consultation period, but a minimum period between starting a consultation and redundancies taking effect.

“The stated aim of the Minister and BIS is to achieve a minimum consultation period. They have expressed the concern that “less responsible” employers could treat the statutory consultation period as a maximum. However, if that were true of the 90 day period, then merely replacing 90 with 45 in the same legislative term will not remove that possibility, if it is real.

“As it stands, this will only create more confusion in this complex area. ACAS guidance cannot make the law say what it doesn’t say.”

“On more detailed but important points, one of the two most regular concerns expressed by businesses in collective redundancy situations   is the “timeline” issue of the overlap between the statutory collective consultation period, the collective consultation process, the individual consultation process, the identification of employees as “potentially redundant”, the notice period of dismissal and the actual termination date.
“The other issue is the overlap between collective redundancy consultation and TUPE consultation when they coincide, as they often do, particularly on outsourcing transactions.

 “It is not yet clear whether ACAS will address these important business issues in its Guidance.”

Tom added. “It is also important to ensure that there is certainty about the transition from the old law to the new. For example, if redundancy plans are proposed or declared before 6 April 2013, will the 90-day period still apply? The transition has not been addressed and ACAS Guidance cannot create legislation on the point.”