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Wording of collective redundancy changes could create uncertainty, expert warns

Draft laws which will cut the minimum consultation period when an employer proposes making 100 or more redundancies could create uncertainty due to the wording used, an expert has warned.15 Feb 2013

Christopher Mordue of Pinsent Masons, the law firm behind Out-Law.com, said that a recently-published draft order could change the trigger point for consultation in collective redundancy cases. The notification period where 100 or more workers are at risk is due to be cut from 90 to 45 days from 6 April 2013, according to the document.

"The new rules apply where the employer 'makes a proposal' for collective redundancies and this doesn't sit easily within the current framework," Mordue said. "Under the current legislation, the obligation to collectively consult about proposed redundancies is triggered when the employer 'proposes' collective redundancies – but this is treated as an issue about the employer's state of mind, rather than an act done by the employer."

"The amendments use an entirely new and different concept – they focus on the actual date when the employer 'makes a proposal' for collective redundancies. So the new rules state that if the employer makes a proposal to dismiss 100 or more employees by reason of redundancy in any 90 day period and does so on or after 6 April, the 45-day notification period applies," he said.

"But what if the employer's state of mind before 6 April was such as to count, under the current regime, as a proposal to make 100 redundancies? Will this mean that the employer can take advantage of a 45-day notification period by delaying actually making that proposal by a couple of days or is the employer stuck with the 90-day notification period that has already been triggered under the current rules?" he said.

The point at which the employer 'proposed' collective redundancies was usually an "academic question" under the current regime, provided that the employer began the consultation period far enough in advance of the date when the first dismissal was due to occur, Mordue said. However, the change in terminology seemed to be a "recipe for litigation" which "could put employers at the mercy of how tribunals will decide these issues", he said.

Collective redundancies are those which involve 20 or more employees at a 'single establishment' within 90 days. Under the current system, an employer which proposes to make collective redundancies must consult on its proposals with unions or representatives of the affected employees. Where an employer is proposing to make more than 100 employees redundant it must allow for at least 90 days consultation, while a minimum consultation period of 30 days applies where between 20 and 99 employees are potentially affected.

The Government announced in December that it was proceeding with plans to cut the minimum consultation period to 45 days where 100 redundancies or more were proposed. The minimum consultation period will remain 30 days where between 20 and 99 employees are potentially affected. Other changes included in the draft order will see employees on fixed-term contracts which have come to an end excluded from consultation requirements.

Employment law expert Mordue said that the change to the status of fixed-term workers could also create confusion in the run-up to 6 April 2013. The new rule will exclude these workers from the scope of the consultation exercise if the employer is proposing to make 20 or more employees redundant in any 90-day period after this date.

"What if the employer doesn't actually make such a proposal because all the dismissals would occur at the end of the fixed term contracts?" Mordue said. "Can the new rules still apply, or do you need to make an actual proposal to trigger the exemption? It seems daft that the employer has to make a proposal about something that doesn't have to be consulted about, just to clearly escape the need to consult," he said.

"These are only transitional issues, as once we get to say June or July it will be clearer that the new rules apply, but given the scope for challenge and the cost of protective awards employers may want to think about how they approach this in the interim period," he said.