Changes to collective redundancy provisions as Employment Rights Bill moves to the House of Lords

Adrian Fryer

The current legal position on collective redundancy is fairly clear:

• Wherever an employer proposes to make 20 or more employees redundant at any one establishment within 90 days then an obligation to collectively consult with appropriate representatives is engaged.
• The length of consultation depends on the number of redundancies being made: at least 30 days for 20-99 redundancies, and at least 45 days where 100 or more redundancies are proposed. The meaning of the term ‘establishment’ has been the subject of several significant cases the most well-known being USDAW v WW Realisation (1) Limited and Ethel Austin, better known as the ‘Woolworths case’. In this case, the ECJ looked at the question of whether each Woolworths branch was a separate ‘establishment’ or whether the business should be looked at as a whole. It decided that each branch could be treated as a separate establishment which meant that, as most branches had fewer than 20 employees, the obligation to collectively consult did not arise.
• Where an employer breached its collective consultation obligations, employees (or their representatives) are able to bring a claim for a protective award of up to 90 days gross pay (uncapped).

This all looks increasingly likely to change under the Employment Rights Bill, which is currently being debated in the House of Lords. The Government recently published its response to its consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire. Key points to note from the response include:

• The cap on protective awards in collective redundancy situations will be increased from 90 days at present to 180 days to encourage employer compliance. This change will be included in the Employment Rights Bill.
• A proposal that interim relief should be available in claims for protective awards and/or claims for unfair dismissal on grounds of fire and re-hire (which are to be introduced in the Employment Rights Bill) will not be taken forward. The government acknowledged that this would place undue burdens on businesses and tribunals.

When the Employment Rights Bill was first published, it included a proposal to remove the concept of ‘establishment’ from the definition of collective redundancy. This would’ve meant that collective consultation would’ve been engaged whenever the total number of redundancies across a business was 20 or more, even if each site was making fewer than 20 redundancies. The proposal to remove ‘any one establishment’ from collective redundancy rules has been changed. The revised plan reinstates the ‘one establishment’ concept but allows regulations to set an alternative threshold for collective consultation to bite when redundancies occur across multiple sites. The alternative threshold is likely to be based on redundancies across the business as a whole and could be a percentage, or a higher number than 20. We will have to wait for regulations to know what this number (and/or percentage) will be.

Contact our Employment Team.