The Government is to make drastic changes to the consultation process employers must follow when faced with making their employees redundant.

Calls for change from employers have led to a new package of reforms in relation to the collective redundancy regime, designed specifically to:

• Improve the quality of consultation;
• Allow employers to react more flexibly to the changing market conditions and restructure effectively; and
• Reduce uncertainty and clarify expectations for employees, both those facing redundancy and those who remain.

Employers who propose to make 100 or more employees redundant at one establishment within a period of 90 days must carry out a minimum period of consultation with the affected employees. No dismissal can take effect before this consultation period is finished. Currently, the minimum consultation period must be no shorter than 90 days.

The Government is to cut in half the required period of consultation to 45 days, from April 2013. The impact of the shorter statutory period on the labour market will be reviewed once the Government has had time to see its full effect.

In addition, non-statutory guidance will be issued to give employers clearer information on how to carry out a good quality consultation, with a particular focus on dealing effectively with the most contentious issues, such as providing guidance on what constitutes an ‘establishment’. The guidance will still allow for flexibility for parties to tailor the consultation process appropriately.

In order to deal with the uncertainty around whether the natural ending of fixed-term contracts triggers a requirement for collective redundancy consultation, fixed term contracts with a clear termination point, which have reached that point, will be excluded from collective redundancy consultation obligations.

For any further clarification, please call our 24 Hour Advice Service on 0844 892 2772.