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Redundancy reforms | Labour’s plans to change collective consultation requirements
Written by Alex Holmes on 2 December 2024
The media has been awash with coverage of Labour’s ‘Plan to Make Work Pay’ since the July General Election. Among the numerous reforms being discussed, one question we’re being asked here at WorkNest is how the proposed changes to redundancy consultation requirements will impact employers.
While this wasn’t one of the employment law changes scheduled for 2024, it’s likely to take shape in 2025, and employers must stay informed to avoid falling short of their obligations.
Here’s what you need to know.
What is collective consultation? Current rules and requirements explained
Collective consultation refers to a process that must take place in certain redundancy situations that meet specific criteria set out in legislation.
The purpose of collective consultation is to allow employers to discuss redundancy proposals with employees or their representatives and explore possible alternatives to avoid job losses or minimise the impact.
Under current rules, employers must either:
- Consult with their recognised Trade Union about the proposals; or
- If no union is recognised, nominate representatives from the affected employee group.
These consultation obligations are triggered when all of the following conditions apply:
- 20 or more redundancies are being proposed; and
- The redundancies occur at a single ‘establishment’; and
- The redundancies are set to take place within a 90-day period.
Thanks to case law from the European Court of Justice (ECJ), employers who find themselves in the unfortunate position of needing to make redundancies are currently able to treat each site as a separate ‘establishment’ for the purpose of redundancy consultation.
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How does Labour plan to change redundancy collective consultation rules?
Labour’s issue lies with the current interpretation of the term ‘establishment’ in redundancy legislation. It believes that defining ‘establishment’ as individual sites undermines the original intent of the law.
With the UK no longer bound by EU regulations, the government is pushing for a formal change. Its aim is to tighten the definition of ‘establishment’ to mean the entire organisation, ensuring that redundancy consultation requirements apply to the organisation as a whole.
This change would be in keeping with the original Employment Appeal Tribunal’s assessment in the case of USDAW v WW Realisation, which was overturned once the ECJ took over the matter.
How will this change to collective consultation obligations impact employers?
If the proposed change is implemented, employers will find that the obligation to collectively consult is triggered more often than before.
Even if the number of redundancies at a particular site fall below 20, if you have made other redundancies across any of your sites in the last 90 days that would take the total number of redundancies to over 20, you will be required to engage with your recognised Trade Union or hold a representative nomination process as a pre-requisite to starting the consultations.
This will mean employers need to allocate extra time for the process to be completed.
Free resources: New Labour Government Hub
From guides to webinars, our employer hub contains all the information you need to prepare for and adapt to impending employment law changes, ensuring your organisation remains compliant in the months and years ahead.
What are the penalties for failing to follow collective consultation obligations?
This can be an expensive mistake to make, so it’s always safest to seek legal advice before undertaking any redundancy process where you believe you may need to collectively consult.
The current maximum penalty that an Employment Tribunal can issue for a failure to consult is 90 days’ full pay for each employee, so the financial ramifications are significant.
You may recall the recent P&O case where the company dismissed hundreds of employees without fulfilling their collective consultation obligations. Not only was this splashed all over the news, but it resulted in costly settlement agreements to avoid the matter going to Tribunal. Employers would be wise to take note.
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Specialist redundancy support for employers
At WorkNest, we specialise in providing expert Employment Law advice tailored to employers.
If you’re concerned about the potential impact of Labour’s proposed redundancy consultation changes, or need guidance on navigating redundancy processes, our team of legal and HR experts are here to help.
We can even conduct consultations on your behalf and offer management training to ensure your team is equipped to navigate redundancy exercises confidently and compliantly.
For support geared to your specific situation, contact our team on 0345 226 8393 or request your free consultation using the button below.