Collective redundancy consultation period should be cut to 30 days for all employees, employers say

Employment law expert Christopher Mordue of Pinsent Masons, the law firm behind Out-Law.com, said that employers were "practically unanimous" in their desire to see the existing 90 day minimum consultation period cut to 30 days.

"Many have commented from experience that a 90 day time period causes unnecessarily prolonged uncertainty for employees at risk and can damage industrial relations by creating an impression that consultation has ceased to be meaningful, and that the employer is just going through the motions," he said.

However the Trades Union Congress (TUC) has warned that cutting the consultation period for collective redundancies could "cost jobs, damage workforce morale and increase unemployment". It said that the existing law should be strengthened so that employees who work in different branches of the same business can be considered as part of a collective redundancy programme.

The Government issued a 'call for evidence' on collective redundancy rules as part of its wider employment law reforms, suggesting that the current rules could be acting as a "barrier to employment flexibility in the labour market". It is also considering the introduction of 'protected conversations' and streamlining criminal record checks and the TUPE Regulations, which protect the rights of employees when a business is taken over by new owners.

Under the current rules, where an employer is proposing to make more than 100 employees redundant it must allow for at least 90 days consultation with unions or workplace representatives before any job cuts can take effect. A minimum consultation period of 30 days applies where between 20 and 99 employees are potentially affected.

The TUC cited the recent experience of former employees of the retail chain Woolworths as an example of "the major anomalies and unjust outcomes" of the current system. After Woolworths went into administration in 2008 the insolvency practitioners failed to consult with USDAW, the recognised trade union, it said. USDAW recently brought a successful application for enhanced redundancy payments for 24,000 of its members, however the court said that 3,000 employees were not entitled to compensation because they were employed in separate 'establishments' with less than 20 employees.

"The Woolworths case is not an isolated example. Unions regularly report that employers attempt to restructure businesses and organisations into smaller establishment units so as to avoid the duty to consult," the TUC said in its submission (30-page / 246KB PDF) to the Department for Innovation, Business and Skills (BIS).

However employment law expert Mordue said that making the 30 day period universal in any case where more than 20 redundancies were proposed was more consistent with the European approach to collective redundancies. The current distinction adds "arbitrary costs" for businesses, he said.

"These costs can actually mean that more jobs have to be placed at risk and are disproportionate. If 99 redundancies are proposed, the consultation period is 30 days. If one more redundancy is proposed, the employer has to employ all 100 staff for an extra 60 days - but one more redundancy doesn't really make the subject matter of consultation more involved or complex," he said.

John Longworth, Director General of the British Chambers of Commerce (BCC) described the existing 90 day minimum consultation period as "archaic and damaging to UK firms".

"A 90 day consultation period may have been necessary when correspondence was conducted via post, but modern technology has rendered such long periods obsolete. Of course firms considering large scale redundancies should consult their staff, but effective consultations can be undertaken in a much shorter time period. Any firm wishing to take longer to consult than the statutory minimum would still be free to do so, as they are now," he said.

"Genuine consultation and effective negotiations between unions and employers can deliver genuine benefits by lowering job losses, avoiding compulsory redundancies and assisting employers to retain skilled staff. The process helps to ensure restructuring exercises are transparent and fair," the TUC said in a statement.

"The TUC believes that effective working relations between employers and unions help to avoid job cuts and to maintain the morale and loyalty of staff who survive restructuring exercises. Longer consultation periods also provide time for employers and unions to explore all alternatives to redundancies including identifying new orders, efficiency savings, restructuring and recruitment freezes."

It added that any reduction in the 90 day minimum period would "send a signal to employers" that it was less important to explore ways of saving jobs.