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Collective redundancy rules to be changed – ‘A more flexible regime and better consultation with staff a must’ says Lamb

News Release issued by the COI News Distribution Service on 21 June 2012

A new package of proposals to reform rules for consulting staff about large scale redundancies was published today by Employment Relations Minister Norman Lamb. The new measures, outlined in a consultation, are aimed at improving the ability of companies to respond to changing economic conditions and improving the quality of the collective redundancies process. The process will also help to relieve the impact of uncertainty suffered by all employees over a long period of time.

Currently large employers have to consult with their staff for 90 days if there is a threat of large scale redundancy. Ministers want to reduce this period and to produce a new Code of Practice to improve the quality of communication between managers and staff, to reduce uncertainty and to make sure that employers can better respond to changes in market conditions.

Last year the Government carried out a Call for Evidence which concluded that there was a need for change. Today, a formal consultation has been published which seeks views on a number of proposals including:

Introducing a new, non-statutory, Code of Practice to give clearer information on how to conduct good quality consultations

Reducing the 90-day minimum period for large redundancies (over 100 staff) to 45 or 30 days

Improving the guidance for employers and employees on the support on offer from the Government

Employment Relations Minister Norman Lamb, said:

“It is never easy for employers or employees when redundancy is a possibility, but it’s clear that the current arrangements are not working in the best interests of either staff or managers.

“Our reforms are about improving the quality of consultations - this really is a case of quality over quantity. The call for evidence showed that the current arrangements are not fit for purpose for the modern labour market and I would encourage people with an interest to get involved in the consultation. At present fear and uncertainty can hang over a workforce for three months, sometimes resulting in some of the best employees choosing to leave, even if they would not have ultimately been made redundant.”

The changes will mean that employers can restructure more effectively and that the workforce is more flexible, while ensuring that employees have access to good quality consultations. The Government believes that this will mean that better decisions are made and limit the uncertainty and stress of the redundancy process.

As well as these important proposals for change, there are some elements that the Government propose to leave as they are, most notably the Protective Award. The Protective Award currently stands at a maximum of 90 days’ pay for each employee affected by a failure to consult and is paid by the employer. As the level of the award is linked to the employer’s attempts to comply (and not to the length of the consultation period) we believe that this penalty is an effective deterrent.

The consultation will run for 13 weeks closing on 19 September.

Notes to editors: 1. The consultation document can be found here - http://www.bis.gov.uk/Consultations/collective-redundancies-consultation-on-changes-to-the-rules?cat=open

2. The Call for Evidence ran from 23 November 2011 to 31 January 2012. The document can be found here - http://www.bis.gov.uk/Consultations/call-for-evidence-collective-redundancy?cat=open

3. The Government's economic policy objective is to achieve 'strong, sustainable and balanced growth that is more evenly shared across the country and between industries.' It set four ambitions in the ‘Plan for Growth’ (PDF 1.7MB), published at Budget 2011:

To create the most competitive tax system in the G20;To make the UK the best place in Europe to start, finance and grow a business;To encourage investment and exports as a route to a more balanced economy;To create a more educated workforce that is the most flexible in Europe.

Work is underway across Government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the Government wants the economy to travel.

4.. BIS's online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See http://www.bis.gov.uk/newsroom for more information.

Contacts:

BIS Press Office
bispress.releases@bis.gsi.gov.uk

Henry Tanner
Phone: 020 7215 5947
henry.tanner@bis.gsi.gov.uk