The maximum protective award for failure to comply with the obligation to consult collectively over proposed redundancies is set to increase from 90 days’ pay to 180 days’ pay. The government has also proposed amendments to the Employment Rights Bill (the Bill) that change its planned approach to the threshold for collective consultation.
Recap of the Bill’s proposals
We analysed the Bill’s proposals on fire and rehire and collective consultation here. In short, there are two key proposals:
- The Bill proposes to make it automatically unfair to dismiss an employee for refusing to agree to a change in their contract of employment, except where the employer can show:
- evidence of financial difficulties;
- that the firing and rehiring was to eliminate, prevent, or significantly reduce or mitigate the difficulties; and
- that the need to change the contractual terms was not reasonably avoidable.
- The Bill would amend the provisions of TULRCA to remove the references to “one establishment”. The effect of this is that all proposed redundancies at all an employer’s sites would be added together for the purposes of the requirement to consult collectively.
Amendments to the Bill
In the recently published package of amendments to the Bill, the government does not propose any significant amendment to the proposal to make dismissal automatically unfair where an employee refuses to agree to a change to their contract and the employer wishes to dismiss and re-engage (or “fire and rehire”).
The government has proposed a significant change to the threshold for collective consultation. Rather than removing the references to “one establishment” in relevant legislation, the government now proposes that the trigger will be either:
- 20 or more employees at one establishment; or
- at least the “threshold number of employees”.
The government would have the power to make regulations specifying the threshold number, which might be a particular number or could be a particular percentage of employees, or it could be calculated in some other way. No matter the method of calculation, the provision will stipulate that the threshold number must not be lower than 20 employees.
The government has also tabled several more minor amendments to the collective consultation requirements:
- The obligation to consult collectively would not require the employer to consult all representatives together and would not require the employer to consult with a view to reaching the same agreement with all representatives.
- Employers would have to disclose in writing the number of employees it is proposing to dismiss and the establishments where they are employed if the employees do not all work at the same establishment.
- The obligation to complete an HR1 form would change to reflect the new trigger for collective consultation. If the employer proposes to dismiss 100 or more employees, they would have to submit the HR1 at least 45 days before the first dismissal takes effect (instead of the current 30 days).
- The trigger for collective consultation on redundancies proposed in connection with a TUPE transfer would mirror the new trigger.
Consultation outcome
The government also launched a consultation seeking views on what remedies should exist for employees claiming automatically unfair dismissal for refusing to agree to a change to their contractual terms and employees claiming a protective award for failure to comply with the obligation to consult collectively:
- It proposed doubling the protective award cap or removing it altogether. The government has decided that the most proportionate and balanced approach is to double the cap to 180 days’ pay. Employment tribunals will retain discretion to make a protective award at the level it considers just and equitable, up to the cap, having regard to the seriousness of the employer’s failure and any mitigating factors. The government plans to issue further guidance on collective consultation processes to address feedback on the need for more support for some employers, particularly those in the small to medium category.
- It also proposed to introduce a right to seek interim relief in collective redundancy and fire and rehire situations. After considering the responses to the consultation, the government has decided not to introduce a right to interim relief in these circumstances. It does plan to update the statutory Code of Practice on dismissal and re-engagement (the Code) to reflect the new provisions of the Bill, if passed. The Code gives employment tribunals discretion to increase a protective award by up to 25% if the employer unreasonably fails to comply with its provisions. With the planned increase in the cap on protective awards to 180 days’ pay, this could result in an award of up to 225 days’ pay in the most serious cases.
If the Bill passes into law, there is a lot of change ahead for employers. We are running a series of 30-minute webinars to highlight the key points employers should be aware of and thinking about. You can sign up for these here.
