Although changes to the collective redundancy consultation regime introduced last month have been well publicised, some important things are not changing.
This article reminds readers of what hasn't changed and explores the practical consequences. Employers who do not appreciate the significance of what is staying the same may fall foul of their on-going legal obligations in collective redundancy situations, particularly in sectors which make frequent use of fixed-term employees.
In February we reported on the publication of draft legislation making changes to the consultation regime for collective redundancies.
The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013 (the Order) came into force, as expected, on 6 April 2013 and the new regime applies where redundancy dismissal proposals "are made" on or after that date.
By way of reminder, the Order made the following changes:
- It reduced the consultation period where there are 100 or more redundancies proposed at an establishment from 90 to 45 days.
- It also reduced, from 90 to 45 days, the minimum period of notice which must be given to the Secretary of State (on form HR1) before the first redundancy dismissals take effect.
- Finally, it excludes fixed-term contracts which are terminating at the point it was agreed they would terminate from the collective consultation requirements. This means that where contracts are coming to their natural end they will not have to be included in the calculation for assessing whether or not collective redundancy consultation is required.
There are some less obvious consequences of these changes to the legislation which employers should understand and these are set out below.
Points to note
The exclusion for fixed-term contracts does not apply where such a contract is ending prematurely because of a redundancy situation. If this is the case then fixed-term employees will count towards the threshold for collective consultation.
The Order does not make any changes to the law relating to unfair dismissal so that where a fixed-term employee has been employed for at least two years (or one year if they started employment before 6 April 2012) they must still be dismissed fairly.
The Order does not make any changes to the existing law where proposals are to dismiss between 20 and 99 employees; the minimum consultation period in such cases remains 30 days.
The potential penalty for failing to consult collectively has also not been changed and the maximum amount remains 90 days' actual pay per affected employee.
New ACAS guidance
Hand in hand with the changes to legislation outlined above, ACAS has published new guidance on redundancy: "How to handle collective redundancies".
The guidance includes:
- a timeline to highlight and explain some of the key stages of a collective redundancy process,
- ten point checklist for handling collective redundancies (including advice on what constitutes an "establishment"),
- a summary of the relevant law,
- sample selection matrix/redundancy agreement,
- an outline of statutory redundancy payments; and
- guidance on the election, roles and responsibilities of employee representatives.
Shoosmiths' article: Fixed term contracts and redundancy consultation: changes from April 2013
ACAS Guidance: How to manage collective redundancies APRIL 2013